Event: on August 22, 2017, HKUST Guochuang released its 2017 mid-year report. In the first half of 2017, the company achieved operating income of 270 million yuan, an increase of 31.43% over the same period last year. The net profit of shareholders belonging to the parent company was 4.6491 million yuan, down 52.70% from the same period last year. Basic earnings per share were 0.02 yuan, down 66.67% from the same period last year.
Comments:
Equity incentive fees dragged down net profit performance and gross profit margin increased slightly. In the first half of the year, the company's business is progressing smoothly and its revenue is growing rapidly. However, due to the equity incentive fee of 10.1571 million yuan during the reporting period, if the influence of this part of the amortization expense is deducted, the net profit of returning to the mother is 14.8062 million yuan, an increase of 50.63% over the same period last year. In the first half of the year, the company's gross profit margin reached 39.17%, an increase of 1.48 percentage points over the same period last year, and the gross profit margin remained basically stable. The company expects the cumulative net profit from January to September this year to be-10 million won 5 million yuan, down 152.5% and 126.25% from the same period last year. The main reason is also expected to generate 31.1633 million yuan in equity incentive-related fees in the first three quarters. We believe that the rapid development momentum of the company's performance has been continued due to the strong demand for information technology downstream. One-time financial expenses such as equity incentives have an impact on the company's short-term performance, but have little impact on the company's long-term development.
The telecom industry continues to expand its high-quality customers. In the most important area of telecom business, the company has become the core supplier of operation support system for China Telecom Corporation, China Mobile Limited and China Unicom. On the basis of the operation support system, it also continues to enhance innovative business cooperation with operators in ICT, the Internet of things and other areas. Compared with the information disclosed in the 2016 Annual report, there are new high-quality customers in the telecommunications field, such as 4 provincial branches of China Telecom Corporation, Hangzhou Research Institute of China Mobile, 3 provincial branches of China Mobile Limited, and 4 provincial branches of China Unicom. The market share of the company's telecommunications business is expected to be further improved. In electric power, finance, transportation and other fields, the company has also made a number of business progress.
Research and development investment continues to increase, the layout of intelligent applications. During the reporting period, the company's R & D investment was 56.6239 million yuan, an increase of 62.69% over the same period last year. Through continuous research and development, it will help to improve the product quality of the company. During the reporting period, the company changed the two fund-raising projects, "Power Enterprise Integrated Management and Control Software Construction Project" and "Enterprise Information Integration platform Construction Project" to "big data-driven Intelligent Application Software Project". Committed to the use of big data, artificial intelligence and other technologies, to provide industry customers with big data platform, analysis and decision-making software, intelligent application software. The smooth development of the project can enhance the competitiveness of the company's products, and is expected to become a new performance driving force.
Earnings forecast and rating: we expect the company's operating income for 2017-2019 to be 7.59,9.69 and 1.189 billion yuan respectively, and the net profit attributable to the parent company to be 4539 yuan, 9092 yuan and 122.52 million yuan respectively. Based on the latest share capital of 211 million shares, the earnings per share are 0.21,0.43,0.58 yuan respectively, and the latest share price corresponds to 96,48,36 times of PE respectively, maintaining the "overweight" rating.
Risk factors: competition aggravates the risk; the risk that the research and development of core technology is not as expected; the risk of large balance of accounts receivable.
