Key Views
1. Leading financial IC card company reports steady growth in performance in the first quarter
The company achieved operating income of 381 million yuan in the first quarter, an increase of 3.49% over the same period last year, and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 56.31 million yuan, an increase of 14.22% over the same period last year. The company's main business is R&D, production and sales of smart cards and related businesses. In the business segment, financial IC cards are the main source of the company's revenue. The company has been in a leading position in the industry for many years in the financial card field. It is the leading and mainstream financial IC card provider in the market. It has maintained well-balanced cooperative relationships with many banks and has extensive customer resources.
2. Extend from cards to end and solutions, and strive to find new product growth points
The number of commercial banks shortlisted by the company increased further in 2015, and the number of cards issued increased year over year, but due to a sharp drop in product sales prices, product profit levels declined year over year. In the future, we will continue to strengthen marketing to achieve continuous growth in the number of cards issued, and at the same time strive to reduce costs and stabilize the profit level of financial IC card products.
In terms of secure terminals, mPOS and smart POS products were shortlisted for the Nongxin Bank headquarters. mPOS passed the UnionPay Rubik's Cube system network access test, and the integrated smart billing platform system targeted the Bank of Lanzhou. At the same time, it has benefited from the “business reform and increase” policy, and sales of tax control products have increased dramatically.
In the mobile payment business, due to the entry of Apple Pay into China and the popularity of Alipay and WeChat, the company has deeply integrated NFC secure payment technology and platform systems, strengthened cooperation with mobile terminal manufacturers, and provided an end-to-end solution for mobile mobile payment security. At the same time, the company initiated special research on blockchain technology and is committed to providing platform solutions for Internet financial and business services.
3. Use the power of capital to accelerate company transformation plans
In 2015, the company raised 1.08 billion yuan of capital through a non-public offering of shares, and plans to invest 650 million yuan, 150 million yuan, and 200 million yuan respectively for the construction of service networks and systems for micro, small and medium-sized merchants, the acquisition of 51% of Shenzhen Yikai's shares, and the development and industrialization of overall mPOS solutions. The goal of the Micro, Small and Medium Merchants Project is to have 1 million active merchants in 2018. One Card Easy's main business is the development and sale of membership management system software based on a SaaS model based on cloud computing. Furthermore, Shanghai Hengyu Investment, a subsidiary of the company, plans to use 15 million yuan of Hansi Anxin to obtain 8.333% of its shares, with the aim of further improving the layout of its Yunbao financial services business ecosystem. This kind of industrial chain extension based on existing advantageous businesses can make full use of the high-quality customer resources and technical resources it has accumulated over a long period of time. It has strong market development potential, and the prospects for the company's Internet finance business will be worth looking forward to.
4. Investment advice:
Hengbao Co., Ltd. has long occupied a leading position in financial IC cards. In the future, as the industry cycle adjusts, it will actively strengthen marketing and reduce costs. At the same time, the company will strategically lay out terminals and solutions to enter the Internet finance business. We are optimistic about the company's past reserves in the financial IC card industry and the direction of future transformation. We predict that in 16-18, the company's EPS will be 0.66, 0.81, and 0.99 respectively, and the corresponding PE will be 25X, 20X, 17X, respectively, maintaining the recommended rating.
Risk warning:
The implementation of the fixed increase and issuance plan has changed, and business development has fallen short of expectations.