Main points of the report
Event description
The company released its semi-annual report for 2016. during the reporting period, the operating income was 692 million yuan, an increase of 24.43% over the same period last year, and the net profit belonging to the parent company was 38.4847 million yuan, an increase of 55.08% over the same period last year, realizing EPS0.08 yuan. During the reporting period, the company removed the major asset item of increasing the acquisition of 100% equity in Yuantong, and replaced it with an agreement to acquire 26% of the underlying equity at a consideration of US $85.8 million.
Event comment
The performance grew steadily in the first half of the year, and cross-border industries became a new growth point. In terms of the main stationery industry, at the end of 2015, the company tried to promote "Kinbor", an independent lifestyle brand, in the domestic market, built an independent official website, and set up flagship stores on several e-commerce platforms. The brand premium was gradually highlighted, superimposed by the people's depreciation dividend, and the gross profit margin increased by 4.63 percentage points. Although operating income fell 6.79 percentage points year-on-year due to the downturn in the stationery export industry, gross profit still maintained a growth rate of nearly 15%. In terms of cross-border industry, Lingyun Media has grown steadily and achieved 235 million yuan in revenue. If we exclude the impact of only tables 5 and 6 in the same period last year, we estimate that the actual year-on-year growth rate during the reporting period should be about 6%. There is little problem in fulfilling the promise of 84.5 million yuan in net profit for the whole year; the imported cross-border e-commerce business progressed smoothly, with revenue of 62 million yuan and gross profit margin of 11.29% in the first half. During the reporting period, the net profit attributed to the parent company increased by 13 million yuan, corresponding to a year-on-year increase of 55.08%, mainly due to the consolidation of Lingyun Media and the 8.75 million yuan of government subsidies received by the company and Lingyun Media in the current period. In addition, since the actual delivery time of the 26% stake in Huiyuantong was in July, no profit was contributed during the reporting period.
Cut into the cross-border payment blue ocean market, the performance is expected to usher in a blowout. Based on the steady growth of stationery business, the company's layout in the cross-border industry is worthy of attention, among which, the cross-border payment industry chain built around "Huiyuantong" may become the next flashpoint. Because the domestic third-party payment institutions have been involved in cross-border payment business for a short time and their comprehensive operation capacity in overseas markets is weak, Huiyuantong has a significant first-mover advantage. With the landing of high-quality customers, barriers to entry have been gradually raised. This blue ocean market has great potential for growth.
Reiterate the recommended logic of Guangbo shares: 1. The 26% equity of Huiyuantong is a measure of rights and interests under high policy pressure, and the two sides have formed a deep binding. On the premise that various conditions are met, the company does not rule out completing the acquisition of the remaining shares of Huiyuantong. 2, the cross-border payment industry chain built around Huiyuantong is expected to become the next performance flashpoint, we believe that Huiyuantong's "Chinese and foreign hybrid" background and rich cross-border payment service experience will become its core competitiveness to broaden the depth and breadth of customers; 3, the impact of the merger of Uber China and DiDi Global Inc. Express is still uncertain, even if the cooperation is terminated next year, Huiyuantong also has the ability to continue to sign major customers.
Risk hint: the process of the acquisition is not up to expectations, and the signing of new customers is not as expected.
