I. Overview of events
We have recently communicated with the management of the company, and the company has recently issued an annual report notice as follows: profit: 158.62 million-211.49 million yuan, a decrease of 20%-40% over the same period last year, mainly due to the decline in USB key prices.
II. Analysis and judgment
The decline in U-key performance is due to increased competition in the industry and price decline while keeping market share unchanged. U-Key customers of Yunxin International Market Company are mainly banks, including Industrial and Commercial Bank of China, Agricultural Bank Of China, Bank of China Ltd., Bank of Communications, China CITIC Bank Corporation, China Merchants Bank, China Minsheng Banking Corp, Huaxia Bank and so on. In addition, other customers of the company's products also include the government, enterprises and institutions, and many other fields. The market demand for U-Key products is still expanding. At present, the profits are reduced due to excessive competition in the market, and the industry as a whole has entered the era of small profits. In addition, with the rise of mobile payments, the number of headphones K and Bluetooth K is also growing, their prices and profits are higher than traditional products, the company is seizing this new market. Yunxin certification: different from the hierarchical distribution of the international market, in China, banks use hardware (UK/OTP) to ensure security, while other enterprises and individual users have not formed a strong market demand. In the short term, Yunxin is unlikely to bring large profits to the company, so the next step is to try to open up the international market.
With the advantage of COS and focusing on smart card business, Walt Disney Company bus card is expected to detonate the bus card market. Feitian's advantage lies in the accumulation of COS (embedded operating system) technology, and COS is also needed on chip cards, so the company focuses its advantages on smart cards. In the field of bank cards, corporate card products have been shortlisted in some banks. At the Paris Card Show just held, the company launched some super smart cards, that is, the identity authentication function is integrated on the chip card. the newly launched super smart card integrates battery technology, output and input technology, display technology and other technologies on one card. at present, the card market competition is very fierce. Feitian hopes to achieve a breakthrough in the market share in the smart card field through technical iteration. In the field of bus cards, Feitian has introduced Walt Disney Company series images into bus cards to enter the bus card market. At present, some cities have begun to issue them. In conjunction with the film released by Walt Disney Company in 2016, Feitian will continue to launch new bus cards for characters. The total number of bus cards issued nationwide is between 30 million and 50 million, and the company will sell Walt Disney Company bus cards through direct sales and distribution channels. In addition, projects such as social security cards and resident health cards are being carried out in an orderly manner.
Third, profit forecast and investment suggestions
Based on the smooth development of the company's transformation, we expect the company's earnings per share from 2015 to 2017 to be 1.02,0.94,0.98 yuan respectively, corresponding to 35,38,36 times of PE respectively. Highly recommended rating for the first time.
IV. Risk hints
1) increased competition; 2) the risk of a less-than-expected transition to a smart card vendor