Main points of investment
Event: the company announced that Nanjing Lingyun, a wholly owned subsidiary of the company, had previously been awarded the first bid candidate for the HDJD14 bid section in the bid-winning announcement of the mechanical and electrical engineering construction of the Jingyu-Tonghua section of the Heda expressway. On May 4, 2016, Nanjing Lingyun received a "bid winning notice" issued by Jilin Provincial High-level Highway Construction Bureau, confirming Nanjing Lingyun as the winning bidder for the above project, with a winning price of 31417931.00 yuan.
Event comments: on the one hand, the company's traffic engineering system integration business has developed rapidly and accumulated more technology and experience, on the other hand, the company takes the northeast market as the key development object, and it is reasonable for the company to win the bid. The winning bid amount of more than 30 million will not only have a positive impact on the company's profits in 2016, but also form a good thrust for the development of the company's northeast market.
The development momentum of power network business is good: the company has accumulated more than 10 years of experience in the field of power system network construction, and has maintained a good cooperative relationship with the State Grid. In recent years, the investment in power grid construction shows an accelerating trend, the construction of distribution network and smart grid ushered in the new and most exciting part, the demand for power information is strong, the annual investment is more than 30 billion yuan.
After two consecutive years of decline, the company's power network business has reversed the adverse situation and achieved better development. As the State Grid continues to increase investment, the company will maintain a certain growth rate.
The development of urban rail transit and intelligent transportation will become the company's main business direction: the company's business is gradually tilted to the transportation industry: 1. The market of urban rail transit is huge, with 10 new subway lines and about 400 km of mileage every year, so it is necessary to build a new supporting ticket inspection, advertising display and station information management system. In addition, there are more than 80 lines, and about 10% of the sites need to be updated and upgraded, which is a market of more than 10 billion yuan. two。 The Ministry of Communications has made great efforts to promote intelligent transportation and put forward more requirements for the deployment of electronic license plates and communication terminals for vehicles and new communication networks for highways. 3. The company has accumulated traffic network technology and market resources for many years, and has participated in the construction of subway network in all first-tier cities and most second-tier cities. 4. The original equipment of foreign-funded companies in the field of rail transit private network will be gradually replaced, which is also a good opportunity for key-bridge communication. It is expected that in the future, the company's main business will rely on the network construction of the transportation industry to maintain steady growth.
Fixed increase of 3.6 billion, layout of new growth points of finance and Internet of things: the company announced in October 2015 that it intends to raise 3.6 billion funds for non-public offerings to be used for Internet of things projects, financial cloud service platforms, and acquisitions in the financial sector. In terms of the Internet of things, the company carries out research and development of Android-based platform, which is combined with the construction of the company's special network in energy, transportation and other industries to form an integrated software and hardware solution, which is expected to achieve an annual profit of more than 150 million yuan.
In terms of finance, the construction of a financial cloud service platform, the purchase of about 75% of Yinghua Lease, and the layout of financial services and upstream financial information services will have a positive impact on the company's diversified development and profitability.
Profit forecast and investment advice: the fixed increase project will expand the company's strength in the Internet of things, finance and other emerging business, and improve the company's profitability. It is estimated that the company's EPS in 2016-2017 will be 0.09 yuan and 0.17 yuan, corresponding to PE 161Compact 86X. We give a "overweight" rating.
Risk hint: fixed increase project failure direction, competition aggravates risk, main business development encounters bottleneck and can not maintain growth risk, new expansion business development is not as good as its risk.