I. Overview of events
Recently, Rong Zhi Lian released its semi-annual report for 2017: 2017H1 realized operating income of 548 million yuan, down 14.45% from the same period last year, and realized net profit of-22.0189 million yuan, a decrease of 48.9189 million yuan over the same period and 181.85% year-on-year. It is expected to achieve a net profit of 3969-68.04 million yuan in January and September, a year-on-year change of-30% and 20%.
II. Analysis and judgment
New business development and complex projects affect performance, and the revenue from signing orders for the whole year is more optimistic.
1. The net profit and loss of homecoming falls into the revised forecast range, which is dragged down by two major factors. The decline in the company's performance compared with the same period last year is in line with actual business expectations, mainly due to two major reasons: (1) the subsidiary car network interconnection focuses on developing businesses in the areas of the Internet of things, such as new energy, smart sanitation and smart cities. Most of this part of the business are overseas, government and more complex projects, and the actual landing cycle of the project is longer than that of the project in the same period last year, with an operating income of 44.5939 million yuan. Decreased by 41.09% compared with the same period last year (2) sales and management expenses increased by 24 million yuan, or 13.71%, over the same period last year. Mainly due to the company's new business development team introduction and annual salary adjustment and other labor costs increased by 9 million yuan, the opening of new office buildings and new intangible assets increased depreciation and amortization expenses of about 10 million yuan, financial expenses increased by nearly 6 million yuan over the same period last year, an increase of 195%. Among them, the capitalized amount of research and development expenses of subsidiary Taihe Jiatong decreased by 9.5979 million yuan, and the amortization amount of intangible assets increased by 3.4061 million yuan, resulting in an increase of 13.004 million yuan over the same period last year.
2. The income has been signed but has not been confirmed to increase compared with the same period last year, and the annual income situation is expected to be more optimistic. At the end of June 2017, the amount of contracts that the company had signed but had not yet confirmed revenue was 765 million yuan, an increase of 20.43% over the same period last year. The company's car network in the domestic customers are mainly government and enterprise units, revenue recognition and payback are mainly concentrated in the fourth quarter, the business sector has obvious seasonality, the company's annual performance is more optimistic.
3. We believe that the company actively implements the transformation strategy of "industry focus, data-driven, building block innovation, honeycomb organization and business going out to sea", and will focus on financial information and biomedical Jiankang in the future. at the same time, the layout of overseas business is making good progress. 2017 is the key time point for the company's strategic transformation, and some fluctuations in performance in the process of transformation are normal business performance.
Extension expands the layout of financial IT, and co-focus produces 1-1 > 2 effects.
1. Plan to acquire Zanrong Electronics and expand the layout of financial informatization. On June 23, 2017, the company announced its intention to acquire Zanrong Electronics at a transaction price of 840 million yuan. Among them, the transaction consideration is 294 million yuan in cash, and the transaction consideration is 546 million yuan in the way of issuing shares, and the issue price is 20.81 yuan per share, with a total of 26237385 shares issued. Zanrong Electronics promised to achieve the net profit attributable to the mother from 2017 to 2019 (whichever is the lower before and after deducting the non-profit) 7, 000 and 8, 000, 000
2. Zanrong Electronics focuses on financial storage, and business collaboration can be expected in the future. Founded in 1997, Zanrong Electronics has been focusing on commercial bank storage system integration and professional services for 20 years, comprehensively tracking and mastering the world's leading storage products and application technology. at present, it has branches and offices in 36 provinces and cities across the country. engineers and technicians account for more than 70%. The main customers are China Merchants Bank, Pudong Development, Ping an, ICBC and other major customers, with solid past performance, while the company's enterprise-level IT service is a traditional advantage business, with excellent performance in system integration and technology development and application services. after the completion of the acquisition, the company will expand financial information services in the whole industry, and the proportion of financial IT business will rise to about 40%, making it the largest business segment.
3. We believe that this acquisition will help to give full play to the synergy and complementarity between the two sides of the transaction, enhance the company's market share in the financial field, the synergy of products and services will spread effectively, and the market channel will be more perfect. Extension development helps listed companies to rapidly expand new business, gain a leading market position, and greatly enhance their sustainable development and profitability, resulting in an obvious "1-1 > 2" effect.
Continue to cultivate biomedicine, leading in China in biological data service.
1. The company's biomedical business achieved an operating income of 51.03 million yuan, an increase of 1.37% over the same period last year. The company continues to maintain in-depth cooperation with BGI, serving customers including Novozhiyuan and other first-class medical research structures, and is currently building a "biological cloud computing project to support molecular medicine" and expanding the model of "platform + operational services". Increase data service revenue. At the same time, the company set up a subsidiary in the United States to actively carry out business to sea.
2. We believe that the company revolves around biological cloud medical ploughing and digging, along with multiple favorable factors, such as the large domestic population base, the deregulation of regulatory policies, the upgrading of medical and health consumption and the reduction of the cost of personal gene sequencing. The growth space of the domestic biological gene industry has been opened, and the economic benefits of the company's advance layout in the biological cloud industry will gradually appear, and the proportion of biomedical business will be further increased. The company is expected to become the leading biological data service company in China.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 is 0.49 yuan, 0.79 yuan and 0.92 yuan respectively, and the corresponding PE of the current stock price is 37x, 23x and 20x, respectively. Give the company 45-50 times PE in 2017 and give the company a "highly recommended" rating with a reasonable valuation of 22.05-24.5 yuan in the next six months.
Fourth, risk tips:
The competition in the car networking industry intensifies; the biological cloud business development falls short of expectations; and the progress of the acquisition target falls short of expectations.