Net profit attributable to the parent company decreased 80% year on year to 3.12 million yuan, in line with expectations, An Jubao announced 2016 semi-annual results: operating income of 339 million yuan, an increase of 4.86% over the previous year; net profit attributable to the parent company was 3.1194 million yuan, a year-on-year decrease of 79.81%, corresponding to profit of 0.01 yuan per share.

Development trends

The company adjusted its product strategy and continued to explore the transformation to the Internet. During the reporting period, the company developed a discount chain app and integrated surrounding discount apps into a discount chain app, realized the core functions of various discount apps and the collection of the latest offers, and reduced the cost of acquiring fans through traffic exchange and other measures;

The company tried a new model of cloud parking, and the promotion of the parking business accelerated. During the reporting period, the company actively explored the new commercial form of “smart cloud parking+connected vehicle gate advertising” and promoted it to B-end customers using the model of giving away equipment and obtaining the right to use advertising space on road gates. A total of 1,741 parking lots were signed during the reporting period, including 1,452 advertising road gate parking lots; a total of 3,495 sets of parking equipment were involved, including 2,675 sets of advertising road gates. In the future, the company will strengthen cooperation with third parties in advertising, applications, data, etc.

Profit forecasting

Considering that investment in the company's mobile internet project and urban cloud parking network project is still increasing, we lowered our earnings per share forecast for 2016 and 2017 from RMB 0.12 and RMB 0.14 by 28.44% and 30.3% respectively to RMB 0.09 and RMB 0.1.

Valuation and advice

Currently, the P/E corresponding to the 2016/2017 EPS of the company's stock price is 151x/134x, respectively.

We maintain our recommended ratings. Due to our downgrade of the company's annual profit forecast, we lowered the target price by 20.0% to RMB 16 accordingly, with room for 19.94% of the increase from the current stock price.

risks

(1) The number of completed houses or new construction was drastically reduced; (2) the company's transformation to the Internet and the expansion of the cloud parking market fell short of expectations; (3) the sector's systematic valuation correction.