I. Incident Overview
Recently, the company released its 2017 semi-annual performance forecast: net profit attributable to shareholders of listed companies was 22.4404 million yuan - 25.8065 million yuan, an increase of 0%-15% over the previous year. Meanwhile, the company recently determined the winner of the Fujian Armed Police Corps conference terminal, monitoring platform, and self-networking equipment procurement project package three. The winning bid amount was 2,926,000 yuan.
II. Analysis and Judgment
Performance increased steadily. During the reporting period, the network maintenance and network optimization business was carried out normally. Net profit attributable to shareholders of listed companies was 22.4404 million yuan - 25.8065 million yuan, an increase of 0%-15% over the previous year. The main reason was that the company's business operations were stable, various businesses were developing normally, and the main business maintained steady growth. In February 2017, the company signed a project procurement contract with Emerson Network Energy Co., Ltd. to strengthen R&D and market expansion in the communication integration business; in April 2017, the company won the bid for the wireless ring network (self-organizing network) equipment procurement project. It was the first case in the country where wireless self-networking technology was applied to communication operators' 2G/3G/4G base station transmission interruption emergency repair, disaster relief and emergency command communication; in June 2017, the company obtained the China Telecom Wireless Network Optimization Enterprise Qualification Certificate, which helps the company enter the China Telecom Network Optimization Market; 2017/7 In January, the company won the bid for the communication engineering labor cooperation service procurement project of the Guizhou branch of Tietong Engineering Construction Co., Ltd. The company's network maintenance and network optimization business is progressing steadily, promoting steady growth in the company's performance.
It won the bid for the Fujian Armed Police Corps self-organizing network equipment procurement project. The self-networking product was continuously recognized by the market. The company won the bid for the Fujian Armed Police Corps self-networking equipment procurement project. The company provided 160 sets of private network all-in-one computers. The product closely integrated self-networking technology with monitoring products, and was able to easily and quickly deploy monitoring, thus improving the security level in temporary key areas. The winning bid for this project is a new expansion in other application fields after the company's self-organized network products were applied to China Mobile's emergency communication scenarios, which shows that the self-organized network products independently developed by the company were further recognized by the market. While continuing to expand customers in the fields of self-organized networking applications such as emergency communication and conference communication security for telecom operators, the company will actively expand various application fields of self-organized networks, continuously increase the revenue share of wireless self-networking in the company's business, and accelerate the implementation of the company's self-networking market strategy. At the same time, the company's product project, as a communication security measure for a large-scale conference provided by the Fujian Armed Police Corps, is expected to accumulate customer resources and project experience for the company.
The funds raised have achieved the strategic layout of the national market, and the establishment of R&D centers to enhance the company's technological innovation advantages is estimated to raise 147 million yuan. The net capital raised in this offering is estimated to be 147 million yuan, mainly invested in communication network technology service platform construction projects and R&D center construction projects. (1) The communication network technology service platform construction project will achieve the company's strategic goals in the national market layout: it is proposed to invest 133 million yuan, including the construction of a headquarters base and marketing service network. Among them, the construction of the headquarters base also includes the construction of a service network management center, a training and exhibition center, and a technical support center; the marketing service network includes expanded or newly built marketing service outlets in Fujian, Shandong, Guangdong, etc. (2) The R&D center construction project will further enhance the company's technological research and development capabilities and enhance the company's technological innovation advantages: it is proposed to invest 40,5978 million yuan. The purpose of implementing the project is to establish a complete product and technology research and development system, further enhance the enterprise's ability to innovate independently, and promote the company's sustainable development.
III. Profit Forecast and Investment Suggestions
The 2017-2019 EPS is expected to be 0.65, 0.83 and 1.04 yuan respectively, and the corresponding PE is 91.85 times, 49.55 times, and 57.40 times, respectively. Since the company is a new stock, the valuation level is high. The company expanded from regional locations to the whole country and overseas. Given the company's expectations of extended mergers and acquisitions, a certain valuation premium was given to the company 115-120 times PE in 2017. The reasonable price range for the next 12 months was 74.8-78.0 yuan. Maintain a “Highly Recommended” rating.
4. Risk warning:
Competition for communication network management services is fierce; market expansion at home and abroad has been blocked; and investment in capital raising has not progressed as far as expected.