Company news: the company released the 2017 interim results report, the first half of the year operating income of 2.51 billion yuan, up 252.4%, gross profit margin of 9.8%, up 2.7%, net profit belonging to shareholders of listed companies 52.21 million yuan, down 39.5%, earnings per share of 0.0841 yuan, down 61.8%. In the second quarter, the sales revenue in a single quarter was 1.19 billion yuan, up 68.4% from the same period last year, and the net profit belonging to shareholders of listed companies was 50.56 million yuan, up 0.3% from the same period last year.
Comments: the company has transformed from continuous mergers and acquisitions to the mobile Internet and Internet of things industry in 2015, and has successively acquired software and hardware manufacturers such as Xingfei Technology, Oriental Tuoyu, China Science and Technology Rongtong, Asahang Network and other software and hardware manufacturers, with intelligent terminal manufacturing, physical network perimeter security, mobile Internet precision marketing and other business capabilities. As the company is in the process of continuous mergers and acquisitions, the year-on-year data of overall sales revenue and net profit fluctuate greatly. From the existing main business entities of the company, the business expansion is good, and the development prospect is worth looking forward to:
The intelligent terminal business is advancing steadily, and the shipment of characteristic products is good: Xingfei Technology and its wholly-owned subsidiaries Ruide Electronics and Oriental Tuoyu achieved sales revenue of 2.47 billion yuan and net profit of 53.392 million yuan in the first half of 2017, both of which achieved steady growth. It is worth noting that Oriental Tuoyu's main VR mobile phones, projection mobile phones, logistics mobile phones have carried out a new generation of development, and obtained good market feedback, for the company in the core customers ZTE Corporation, Shunfeng, Philips, Baoqianli, Konka, Haier and other users on the basis of close cooperation, including "three links Yida" and other well-known customers.
Perimeter security benefits from increased national security demand and continued expansion: Zhongke Rongtong, as the implementing entity of the perimeter security business, achieved a 15.6% increase in sales revenue to 36.959 million yuan in the first half of the year, although the net profit decreased slightly, but the progress in obtaining channels after the company's cost investment is worth looking forward to. In the judicial field, the prison market in Beijing, Tianjin, Jiangxi, Chongqing and other places has been consolidated, and with the progress of the country's Belt and Road Initiative construction, the company has actively promoted the overall border control planning including Yunnan, Xinjian, Liaoning and other places, participated in the government PPP project, and expanded its own continuously optimized perimeter security radar and perimeter intrusion detection and early warning products.
The existing business momentum is good, and the Xuhang network has gained another increment: the company's revenue for the second half of Xingfei Technology is expected to be 4.03 billion yuan, and the net profit is expected to be 105 million yuan, while that of China Science and Technology is expected to be 154 million yuan, and the net profit is expected to be 34 million yuan. combined with the results achieved in the first half of the year, the overall income contribution of the above two entities is expected to be 6.69 billion yuan, and the net profit is expected to be 197 million yuan. In addition, the company has completed the advance payment for the acquisition of 100% equity interest in Xuhang Network with 940 million yuan in cash. In the process of industrial and commercial change registration, if it is successfully implemented, Xuhang Network's promised performance for 2017 is 70 million yuan net profit, and according to the financial data disclosed in the previous proposed acquisition announcement, 34.28 million yuan has been completed in the first half of the year, and the completion of the promise can be expected. More importantly, as a manufacturer of mobile network precision marketing, Xuhang Network can achieve good synergy with the company's existing overseas market operators' channels and push the precision marketing business overseas. open up more market space for the company's future growth.
Investment advice: we expect the company to earn 0.50, 0.66 and 0.73 yuan per share from 2017 to 2019, respectively. The return on net assets is 10.4%, 12.4% and 12.4% respectively, and the proposal to increase holdings-An is given. The six-month target price is 14.50 yuan, which is equivalent to 29.0, 22.0 and 19.9 times dynamic price-to-earnings ratios from 2017 to 2019.
Risk tips: the integration of M & An assets is not as fast as expected; the expansion of new business such as smart phones and overseas distribution of APP in the industry is not as expected; and the intensification of market competition affects the company's profitability.