Main points of investment:

There has been a marked increase in performance. In the first half of 2016, the company achieved operating income of 515.5933 million yuan, an increase of 31.39% over the same period last year, a net profit of 63.1716 million yuan, an increase of 36.91% over the same period last year, and a net profit of 57.4382 million yuan, an increase of 157% over the same period last year. 02%. The increase in operating income is mainly due to the increased market development efforts in the current period and the merger of Shanghai Science and Technology Company, resulting in an increase in revenue from the IT business and environmental protection business in the current period compared with the same period last year. The increase in net profit is mainly due to: (1) the environmental protection industry turned from loss to profit, and (2) the sales revenue of software services and software products with high gross margin increased greatly compared with the same period last year.

Software service business and environmental protection business are growing rapidly. In terms of products, (1) revenue from software services was 295.2136 million yuan, up 31.00% from the same period last year, and gross profit margin was 72.63%, down 5.08% from the same period last year; (2) revenue from environmental protection products was 105.6618 million yuan, up 38.33% from the same period last year, and gross profit margin was 32.62%, an increase of 18.43% over the same period last year. (3) the sales revenue of hardware products was 52.0769 million yuan, down 4.75% from the same period last year, and the gross profit margin was 0.21%, an increase of 0.02% over the same period last year; (4) the sales revenue of self-developed software products was 38.6829 million yuan, an increase of 118.20% over the same period last year, and the gross profit margin was 100%; (5) the system maintenance was 15.7804 million yuan, an increase of 19.63% over the same period last year, and the gross profit margin was 100.00%. The company has high gross profit margin and rapid revenue growth in software service business and environmental protection business.

Financial technology products continue to innovate, and the financial IT industry chain continues to improve. (1) Financial technology product level: 1) process banking, electronic banking, image risk control and insurance business, call center and other traditional business continue to maintain their leading market position, and constantly push through the old and bring forth the new. 2) in the field of risk management, it is the first to launch a comprehensive risk management system, integrating integrated pricing system, asset-liability system, etc., with high bid winning rate and strong market demand. (2) Financial technology service level: the company is committed to creating a consumer financial IT cloud service platform, and the subsidiary Keshan's financial O2O aggregation platform is online to carry out financial scene innovation covering consumer services; the company funded the establishment of Hangzhou Xinyada Pantai Technology Co., Ltd., which will provide technical services for consumer finance. (3) Industrial chain expansion: the company plans to buy 80% of Jinwang Antai for 960 million yuan. The company is expected to make use of Jinwang Antai's customer base and data docking capabilities, combined with its own supply chain financial IT solution capabilities and cooperative financial institutions resources, through the integration of enterprises in the supply chain to form a financing, transaction, credit ecological circle.

Increase investment in interest chain technology and increase block chain technology research and development. The company announced that the company intends to invest 5 million yuan with Zhejiang University Wangxin and Zhejiang Junbao to increase the capital of Hangzhou interesting chain Science and Technology, and the company will hold a 10% equity stake after the capital increase. Founded in 2016, the company focuses on the research and development of the technology at the bottom of the blockchain, with the core staff of the blockchain laboratory of Zhejiang University as the co-founder, and the core teams all have doctorates. At present, the company is mainly engaged in the research and development and application of the underlying technology platform of block chain. The company is expected to increase capital to invest in interest chain technology, strengthen cooperation with interest chain technology on the underlying technology platform of block chain, speed up the progress of the company's use of block chain technology to provide application solutions for the financial industry, and promote the company's business development in financial technology.

The environmental protection business is getting better and better, and the market potential is increasing. Tianming Environmental Protection, a subsidiary of the company, is not only the pioneer and leader of domestic rotating plate electrostatic precipitator, but also an active advocate of ultra-clean emission of wet precipitator. During the reporting period, (1) Tianming Environmental Protection provides integrated solutions and services for smoke and dust emission enterprises, the main products include dust collector body, high-frequency power supply, electronic control equipment and optimal management software, etc. (2) Tianming Environmental Protection insists on attaching equal importance to team building and incentive mechanism to further improve marketing ability. (3) the signing of the contract is good, and the quality of the contract is generally improved, with a business income of 110.2913 million yuan and a net profit of 10.0039 million yuan.

Profit forecast and valuation. Assuming that Jinwang Antai amalgamates at the end of 2016, we predict that the company's return net profit for 2016-2018 will be 164 million yuan, 271 million yuan and 334 million yuan respectively, and the EPS after considering additional equity dilution will be 0.34 yuan, 0.56 yuan and 0.69 yuan respectively, with an average annual compound growth rate of 40.2% in the next three years. Refer to comparable companies in the same industry, give the company dynamic PE55 times in 2017, with a 6-month target price of 30.80RMB. Maintain a "buy" rating.

Risk hint. The application expansion of supply chain finance is not up to expectations; acquisition integration is not up to expectations.