Event description
On April 25, 2016, Hengbao released its 2015 annual report, which showed that the company's operating income in 2015 was 1.821 billion yuan, an increase of 17.40 percent over the same period last year. The net profit belonging to shareholders of listed companies was 371 million yuan, up 26.95 percent from the same period last year. The net profit of shareholders belonging to listed companies was 346 million yuan, an increase of 26.17 percent over the same period last year. In addition, the company issued a profit distribution plan for 2015, with a cash dividend of 1 yuan (including tax) for every 10 shares.
Event comment
The number of smart cards issued continues to increase, supporting the rapid growth of revenue performance: the main reason for the rapid growth of revenue is that with the good customer channels of the banking department, the number of financial IC cards issued continues to grow, driving the company's smart card business revenue to grow by 17.15% compared with the same period last year. The reasons for the rapid growth of net profit are as follows: 1, while income increases, the company reduces production costs in raw material procurement and manufacturing, resulting in a 2.76% year-on-year increase in gross profit; 2, Nanjing Shengyu Yongxin equity investment dividend, entrusted interest income increased, resulting in investment income increased by 11 million yuan; 3, the increase in government subsidies led to an increase in non-operating income of 11 million yuan.
The smart card industry maintains a high boom, and new business development continues to advance: China's smart card industry remains high enough to support the company's main smart card business to maintain rapid growth. In addition, the company continues to expand new business, specifically: 1, in the field of security terminals, the company's Internet payment terminal has become the main shortlisted supplier of Agricultural Bank Of China, China Construction Bank and Everbright Bank. MPOS has passed the UnionPay network test, and mPOS is expected to become a new profit growth point for the company; 2, in the field of mobile payment, the company develops overall mobile payment solutions such as eSE, TEE, HCE, blue card Key, etc., opening up a new growth space for the company.
Layout "Internet +" to build a service operation platform for small and medium-sized and micro merchants: in December 2015, the company revised the fixed increase plan and proposed to raise an additional 1.08 billion yuan, with plans to invest 650 million yuan, 150 million yuan and 200 million yuan respectively in the construction of the service network and system of small and medium-sized micro businesses, the acquisition of 51% equity interest in Shenzhen Yika Yi, and the R & D and industrialization of the overall solution of mPOS. On July 31, 2015, the company has acquired a 45.66% stake in Shenzhen Yikayi. In December 2015, the company's Shanghai Hengyi Investment plans to use 15 million yuan to participate in the 8.333% stake in Hanson. The Shenzhen Yi Card member management system, member resources, the company's mPOS and Hanson's information security business constitute the foundation of the company's small and medium-sized merchants' service business, which lays a solid foundation for the company's follow-up development of brand-new business models such as "Internet + Finance" and "Internet + Business".
Investment suggestion: we are optimistic about the company's future development prospects, and it is estimated that the company's fully diluted EPS in 2016-2018 will be 0.68,0.85,1.05 yuan respectively, reiterating the "buy" rating.