Summary of the report:
Event: Hua Pengfei released the 2017 interim results report, the company realized operating income of 437 million yuan, an increase of 55.51% over the same period last year, and the net profit of shareholders belonging to listed companies was 58.5318 million yuan, up 69.39%, corresponding to EPS of 0.11 yuan, an increase of 69.23% over the same period last year.
Comments:
With the steady progress of the transformation, the new surveying and mapping and data service business led to the substantial growth of the company's revenue. The company achieved an operating income of 437 million yuan in the first half of 2017, an increase of 55.51% over the same period last year, mainly due to the contribution of 171 million yuan from the surveying and mapping and data services business after the 2016 merger of Sun Company, accounting for 39% of the total revenue. Revenue from integrated logistics services and smart mobile services maintained steady development, contributing 166 million yuan and 86 million yuan respectively to operating income, up 8.58% and 3.12% respectively over the same period last year.
The income structure has improved and the high gross margin business has improved the overall profit level of the company. In the first half of the year, the company achieved a net profit of 58.5318 million yuan, up 69.39% from the same period last year, and the comprehensive gross profit margin was 33.95%, up 4.91% from the same period last year. This is mainly due to the fact that the smart mobile services and mapping and data services developed by the company since 2015 are high gross profit and account for a significant increase in total revenue, with gross profit margins of 65.32% and 34.80% respectively, much higher than 19.52% of the integrated logistics service business. With the expansion of new business, the company's revenue structure has been improved, with the three main businesses accounting for 20%, 39% and 38%, respectively.
The transformation of the company's new business is progressing smoothly, and the traditional business continues to open up new growth points. Through the acquisition of Bo Han Weiye and Hongyi, the company has successfully transformed the intelligent mobile services, surveying and mapping and data services industry.
During the reporting period, Bo Han Weiye contributed 257 million yuan in operating income, accounting for 58.85%, and contributed 63 million yuan in net profit, of which its subsidiary Hongtu contributed 171 million yuan in revenue and 33.36 million yuan in net profit. The company continues to deepen integrated logistics services and expand its traditional business scope to the tobacco industry by setting up a new company to develop dedicated logistics operation capabilities.
Investment suggestion: the company opens the large logistics strategy through the acquisition of Bo Han Weiye and Hongyi Chuangzhan. In the future, high-end supply chain management and logistics financial services will become the company's profit point. We expect that the company's EPS in 2017-2019 will be 0.35,0.40,0.42 yuan respectively, corresponding to PE as 32X/28X/27X, respectively, and will be rated as "overweight".
Risk hint: competition in the logistics sector intensifies, and the performance of subsidiaries is lower than promised.