Main points of investment:
17H1's revenue was nearly 200m yuan, an increase of 42%. The company released a semi-annual report that the revenue in the first half of 2017 was 197 million yuan, an increase of 42% over the same period last year; the net profit was 28.04 million yuan, an increase of 34%; and the net profit after deducting non-return was 27.97 million yuan, an increase of 34%. In 2017, Q2's single-quarter operating income was 102 million yuan, an increase of 29% over the same period last year, the net profit of returning to the mother was 15.5 million yuan, up 16% over the same period last year, and the net profit after deducting non-return was 15.53 million yuan, an increase of 17% over the same period last year. The rapid growth of the company's performance is mainly due to the growth of revenue from software development and maintenance business.
Software development is growing rapidly, and the level of gross profit margin is stable. (1) Sub-business situation. The revenue of the software development business was 180 million yuan, an increase of 50% over the same period last year, with a gross profit margin of 50.8%, a decrease of 2.0% over the same period last year; maintenance service revenue of 10.11 million yuan, an increase of 48% over the same period last year, and a gross profit margin of 75.6%, a decrease of 0.6% over the same period last year; system integration business revenue of 9.43 million yuan, a decrease of 34% over the same period last year, and a gross profit margin of 9.9%, an increase of 4.2% over the same period last year. The comprehensive gross profit margin was 50.1%, an increase of 1.0 percentage points over the same period last year. It can be seen that the company is gradually reducing the proportion of system integration business with low gross margin, focusing on the development of software development and maintenance services. (2) fees. The sales expense rate was 0.6%, a year-on-year decrease of 0.2%, and the management expense rate was 34.9%, an increase of 3% over the same period last year. This is mainly due to the increase in R & D investment and the amortization of equity incentive costs (the company launched a restricted stock incentive plan in February 2017).
The cooperation project with Qian Fanghaojin has been approved for the record. On April 26, the company signed a cooperation agreement with Qianfang Haojin Technology (Tianjin) Co., Ltd., planning to set up a subsidiary in Hong Kong and, through this subsidiary, jointly set up a joint venture with Qian Fangjin (or its subsidiaries) to carry out electronic payment projects in Hong Kong and Macao.
On July 24, the company disclosed that the cooperation project has been approved by the Shenzhen Development and Reform Commission, and the cooperation process between the two sides is expected to be further accelerated. According to the company's disclosure, Qianfang was founded in 2012, focusing on intelligent networking of payment services, and has provided services to millions of merchants and nearly 50 million consumers. This cooperation enables the company to obtain partners in financial payment application scenarios, and it is also an important way for the company to promote aggregate payment systems in Hong Kong and Macao. The company is expected to further strengthen the block chain technology research and development capabilities, as soon as possible to achieve application landing and industrialization.
Innovative technology helps financial technology. Over the years, the company has provided financial IT services based on multi-technology platforms to all kinds of banks. Based on big data, cloud computing and other technologies, the company focuses on technological innovation of financial software services. (1) pay attention to the maintenance of advanced technological capabilities. According to the China News, in the first half of the year, the company applied for 2 software copyrights and obtained 26 software product certificates, and the research and development process was smooth. (2) vigorously lay out the block chain. According to the company's website, in addition to cooperating with Qian Fanghaojin, the company also signed a cooperation agreement with IBM in February 2017, planning to set up a Sifang Fine Trading Block chain Innovation Center, and using IBM cloud computing and design thinking for development proof-of-concept and testing. This cooperation combines IBM's advanced technology with Sifang's accumulated bank customer resources over the years, and is expected to vigorously promote the application of blockchain in the financial industry.
Profit forecast and investment advice. We believe that the company's professional understanding of banking systems is expected to continue to lay the foundation for performance growth, and the layout of the Fintech area is expected to win development opportunities for the company in the future. We estimate that the EPS of the company from 2017 to 2019 will be 1.07 1.47max 1.97 yuan respectively. With reference to comparable companies in the same industry, the company is given a dynamic PE45 times in 2017, with a 6-month target price of 48.15 yuan per share, maintaining a "buy" rating.
Risk hint. The risk that Fintech's business progress is lower than expected and the risk of a decline in gross margin.
