Event
According to the semi-annual report released by the company, the operating income in the first half of 2017 was 550 million yuan, down 14.45% from the same period last year; the operating profit was-38.95 million yuan, down 222.73% from the same period last year; and the net profit belonging to shareholders of listed companies was-22.02 million yuan, down 181.85% from the same period last year.
Brief comment
The decline in revenue and profit is mainly due to the delay in the recognition of project revenue and the increase in costs caused by new business expansion.
1) due to the large volume and complexity of some of the company's projects, the company has signed but not confirmed the contract amount of 765 million yuan, an increase of 20.43% over the amount of unrecognized income contract at the end of last year. 2) the revenue of the company's car networking business was 450 million yuan, down 41.09% from the same period last year. The main reason is that in order to develop car networking innovation business, the company has laid out new energy, smart sanitation, smart city and other areas of the Internet of things, and most of this part of the business is overseas projects. As a result, the actual confirmed revenue in the first half of the year is significantly lower than that in the same period last year. 3) the company's sales and management expenses increased by 24 million yuan, or 13.71%, over the same period last year. The company's labor costs such as the introduction of new business development team and annual salary adjustment increased by 9 million yuan, the opening of new office buildings and new intangible assets increased by about 10 million yuan, and financial expenses increased by nearly 6 million yuan over the same period last year, an increase of 195%.
Strategic transformation brings together the financial and biomedical industries, and the car networking business goes out to sea on a pilot basis.
2017 is the key year of the company's strategic transformation, the company put forward the "industry focus, data-driven, building block innovation, honeycomb organization, business out to sea" company strategy. Financial and biomedical industries gather together in the industry, enhance the financial storage business strength through the acquisition of Zanrong Electronics, set up a wholly-owned subsidiary with Zhongrong Trust to develop and build the core business system of asset management and wealth management industry, and gradually develop the biological cloud business in the US market; in terms of going out to sea, the car Internet business is expanding to Southeast Asia, and participates in the British car Internet data analysis company THE FLOOW LIMITED.
Profit forecast
In 2017, the company had some pressure on revenue and profit, but we are optimistic about the company's strategic transformation and believe that the company will rely on cloud platform to expand data service business in biomedicine in the future, and target innovative businesses such as UBI in vehicle networking to add new growth points for the company. We predict that in 17-19, the company's revenue will reach 1.75 million yuan, 3.03 billion yuan, 3.68 billion yuan, and the net profit will reach 2.510 million yuan, with a three-year compound growth rate of 20%. The corresponding EPS is 0.39, 0.46, 0.63, respectively, maintaining the "overweight" rating, with a target price of 21.0 yuan.
