Event: the company announced a forecast for the first quarter of 2016, realizing a net profit of 1000-15 million yuan belonging to listed companies, compared with a loss of 3.5371 million yuan in the same period last year.

Comments:

The profit in the first quarter turned to profit, mainly due to the consolidation of page game business Daoxi Technology in September 2015. as a high-quality partner of Tencent's page game platform and Facebook Inc, it promised that the net profit for 2015-2017 would not be less than 60 million, 78 million and 101.4 million respectively. The company lost 80 million in 15 years, and we judged at that time that the main reason was to lay a good foundation for the 16-year-old pine to fight and release the performance. The total goodwill of Beijing Yizhong Post and Central Asia Interconnection is about 110 million yuan, and almost all of the impairment is included in the annual report. there is no risk of goodwill impairment in the future, and we are optimistic that the company is expected to achieve considerable performance in 2016.

As a pure enterprise SaaS service provider, the company has accumulated hundreds of thousands of service enterprises since 2004, and is the forerunner of the domestic SaaS industry. Its SaaS application ecology has changed from a previous mailbox to a unified cloud office platform that now includes IM, OA and videoconferencing. We believe that with its first-mover advantage, customer resources and technology accumulation, the company will occupy an important market position in the enterprise SaaS field.

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