Main points of investment

Event: the company's revenue in 2016 was 249 million yuan, down 11.05% from the same period last year; the net profit attributed to the parent company was-80 million yuan, down-1534.13% from the same period last year.

Comments:

This performance loss is mainly due to the impairment of goodwill, and the company's main business is relatively stable. The company lost 80 million in 15 years, mainly because the total goodwill of the two subsidiaries, Beijing Yizhong Post and Central Asia Interconnection, is about 110 million yuan, and the balance of goodwill impairment is 80 million in the annual report, almost all of which are impairment, and there is no goodwill impairment risk in the follow-up. Excluding the impairment of goodwill, the company's main business is relatively stable, and with the consolidation of Daoxi Technology for the whole year of 2016, we are optimistic that the company is expected to achieve considerable performance in 2016.

The gross profit margin has risen steadily, and the proportion of three fees has increased slightly. The company's 2015 gross profit margin was 67.12%, up 8.73% from 59.75% in 2014; in terms of fees, sales expenses accounted for 4.04% of revenue compared with 38.02% last year; and management expenses increased by 7.12% from 22.2% last year. The increase in the proportion of sales expenses and management expenses in revenue is mainly due to the stable expenses in the past 15 years and the decline in revenue.

The share of expenses is expected to remain stable in 2016 as revenue grows.

At present, the company has cooperated with China Mobile Limited to carry out cloud services for small and medium-sized enterprises, and it is the only listed company that provides a full range of services from cloud platform construction and SaaS application to platform support. The company's subsidiary Beijing Sanwu Unicom is responsible for the complete operation of China Mobile Limited's cloud services for small and medium-sized enterprises, with an overall market of more than 100 billion yuan.

Profit forecast and valuation: the company's EPS in 2016-2018 is expected to be 0.27,0.38,0.52 yuan, maintaining the "overweight" rating.

Risk hint: SaaS competition intensifies; cooperation with China Mobile Limited is not as expected