Performance Overview
In the first half of 2017, the company achieved operating income of 90.9986 million yuan, an increase of 68.56% over the same period last year, and the net profit belonging to shareholders of listed companies was 6.3411 million yuan, an increase of 153.68% over the same period last year.
Business analysis
The strategic transformation is beginning to bear fruit, and the performance growth is in line with expectations. Shikai Technology, which completed the merger and acquisition last year, was all included in the company's consolidated statements from January to June this year, while the coal safety industry improved, driving the company's performance growth, and its operating income increased by 68.56% compared with the same period last year. Net profit belonging to shareholders of listed companies increased by 153.68%. The company's business sector has changed from a single coal mine safety monitoring business to three major business sectors: military industry, traditional coal mine safety supervision business and rail transit informatization. The company has mastered key technologies in three business segments, formed leading high-tech products, accumulated a number of high-quality customers, and constantly developed new technologies and launched new products, laying the foundation for the company to develop new business and further increase its market share.
The profitability of coal enterprises has improved, and the demand for coal mine safety supervision products has rebounded. Under the influence of national policies such as capacity loss and supply-side structural reform, coal prices have rebounded to a certain extent, the overall profitability of coal enterprises has improved, and the demand for safety products has rebounded. In the first half of the year, the company's operating income of coal safety monitoring products reached 39.48 million yuan, an increase of 17.64% over the same period last year, accounting for 43.38% of the total revenue; product gross profit margin was 56.64%, 15.81% lower than the same period last year. The company has many years of experience in the coal mine safety service industry, the coal mine roof monitoring and monitoring occupies a leading position in the subdivision industry, and the core management team maintains the stability of the coal mining sector business under the depressed market environment. It is expected to benefit from the gradual transmission of profit improvement of downstream coal enterprises.
Shikai science and technology merge table, the field of military-civilian integration has become a new growth point of the company. In October 2016, the company completed the acquisition of Shikai Technology and included in the consolidated statements, the main products are missile guidance systems and precision optical systems. After the completion of the acquisition, the synergy effect of the company began to appear. Fuhua Yuqi worked hand in hand with Shikai Science and Technology to obtain a military communications project and realized operating income of 5 million yuan. The company achieved a total operating income of 14.87 million yuan for military products in the first half of the year, with a gross profit margin as high as 64.76%, accounting for 16.34% of total revenue. Xi'an military-civilian Integration Industrial Fund has recently basically completed its investment in a military enterprise under the operation of a professional management team. The enterprise is mainly engaged in the R & D, production, sales and service of systems and terminal products in the fields of wireless communications, satellite navigation, avionics and measurement and control. In addition, with the completion of due diligence, the high-quality military industrial projects reserved in the early stage of the Xi'an military-civilian Integration Industrial Fund will be gradually implemented in the second half of the year.
High-speed rail WIFI has won the first national application of "Fuxing", and there is a broad space for the development of rail transit informatization. In terms of communications business, the company accounts for more than 70 per cent of the market share in Platt WIFI, with revenue of 36.65 million yuan and gross profit margin of 45.90 per cent in the first half of the year. The company's high-speed rail WIFI integrated server solution has been applied for the first time in the country in the high-speed rail standard bullet train Fuxing, which has achieved another major breakthrough in the railway WIFI market. With the first successful application of high-speed rail standard bullet train "Fuxing", the stock transformation and incremental standard configuration of high-speed rail will increase the demand of the company's rail transit market, and shipments will gradually increase.
Profit forecast
We forecast that the company's operating income from 2017 to 2019 will be RMB 486,582 million, an increase of 68%, 25% and 20% respectively over the same period last year; and the net profit of 80 million / 103 million / 126 million yuan, an increase of 167% and 167% respectively over the same period of the same period last year, with an increase of 0.12%, 0.1616 and 0.19 respectively, and the corresponding PE will be times higher than that of 70-54-44.
Investment suggestion
We believe that the company's transformation of military industry has been completed, Shikai science and technology has become the main force of military business, existing and under development products can guarantee performance growth, and civil-military integration M & A fund provides a sustainable development direction; high-speed rail WIFI integrated server equipment and solutions have achieved new breakthroughs; national policies such as capacity removal and supply-side structural reform have led to the recovery of the coal industry, which is conducive to the recovery of demand in the traditional main industry. Maintain the company's "buy" rating, with a target price of 1214 yuan for the next 6-12 months.
Risk hint
The risk of M & An integration, military investment is not as expected, coal prices have fallen sharply.