Investment logic
Financial IC card business develops steadily: the financial IC card market will maintain steady growth for a long time in the future; the company has been in an industry-leading position in the financial card field for many years, with a market share of about 15%; the company has maintained a balanced and good cooperative relationship with a number of banks and has extensive customer resources. The above factors provide a guarantee for the healthy development of the company in the financial IC card field.
4G and NFC mobile payments bring opportunities for the growth of communications business: the company is the largest supplier of China Telecom Corporation and China Unicom SIM cards and accounts for about 15 per cent of China Mobile Limited SIM cards. In addition, due to the rise of the NFC mobile payment market, communication operators and banks have increased their investment, and the company has the corresponding customer base and technical resources for both SWP-SIM and HCE solutions in the field of NFC mobile payment. Therefore, the improvement of 4G penetration and the development of NFC mobile payment in the future provide favorable conditions for the development of the company's communication business.
"Operation Reform" to activate the tax control market: starting from May 1, 2016, the pilot project of changing business tax to value-added tax will be launched nationwide, and all business tax taxpayers in the construction, real estate, financial and living services industries will be included in the pilot scope. It is estimated that the total number of taxpayers involved in the four major industries is nearly 10 million, which will greatly enhance the development space of the company's tax control plate business.
Lay out the service system of small and medium-sized and micro merchants and create the "Internet + Commerce + Finance" industry chain: through a fixed increase of 1.08 billion yuan, the company will build the service system of small and medium-sized and micro merchants, which can be seen as an extension of the industrial chain based on existing advantageous businesses. can give full play to its long-term accumulation of high-quality customer resources and technical resources. After the formation of the business system, it can improve the operating efficiency for small and medium-sized and micro businesses, facilitate financing, and form an overall solution of "Internet + Business + Finance". Therefore, it has a strong market development potential.
Investment suggestion
We believe that the demand of financial IC card and communication smart card market is sustainable, and NFC mobile payment and "revenue growth" policy bring new growth points for the development of the company's related business. In addition, the construction of the service system of small and medium-sized micro-businesses will bring a broad space for the company's expansion in the field of Internet finance. Therefore, we give the company a "buy" rating.
Profit forecast
We predict that the company will achieve EPS 0.64 yuan and 0.71 yuan in 16-17 years. With reference to the comparable company valuation, we will give the company a target price of 25 yuan in the next 6-12 months, which is equivalent to 39x16PE and 35 × 17PE. Give the company a "buy" rating.
Risk hint
Slow growth rate of IC card market, customer expansion and operational risk of small and medium-sized micro-merchants service system