The performance is in line with expectations, and the extension helps the business upgrade performance to meet expectations. According to the company's announcement, the operating income in 2016 was 692 million yuan, up 24.43 percent from the same period last year, and the net profit was 38.4847 million yuan, up 55.08 percent from the same period last year. The net profit from January to September 2016 is expected to be 58.66 million-85.32 million yuan, an increase of 10%, 60% over the same period last year.
The operating cash flow has improved significantly. In the first half of 2016, the cash flow generated by operating activities was 109 million yuan, an increase of 372.27% over the same period last year. In addition, the company's business structure has been improved and optimized, and the traditional stationery business shows a trend of improving operational efficiency, with a gross profit margin of 4.63 percentage points higher than that of the same period last year. Through mergers and acquisitions and equity participation, revenue from the Internet and cross-border e-commerce has reached 43%.
The extension strategy continues to advance. In 2014, the company acquired Lingyun Media to seize the entrance to Internet traffic; in May 2015, the company established Global Amoy to enter the field of cross-border e-commerce; in July 2015, the company participated in Poyuan Technology and laid out e-commerce solutions; in January 2016, it set foot in the field of cross-border payment settlement services and took a stake in Huiyuantong, a company that connects domestic and foreign innovative payment services.
Through extension, the company has basically created a perfect layout of the cross-border service industry chain based on the Internet. In the future, by giving full play to the synergy of each module, the company will provide one-stop traffic introduction, e-commerce management, payment and settlement services.
Investment suggestion: through epitaxial mergers and acquisitions, the company's business structure has been improved and optimized, and the operating cash flow has improved significantly. It is expected that the layout of each link of the company's cross-border service industry chain will play a synergistic effect and achieve business upgrading through follow-up integration. It is expected that the company's EPS for 16-17 years will be 0.32 yuan and 0.42 yuan respectively, maintaining the buy-A rating and the 6-month target price of 26 yuan.
Risk hint: the development of cross-border payment industry is not as expected.
