Event

According to the 2017 interim report, 2017H achieved an operating income of 600 million yuan, an increase of 38.0% over the same period last year, a total profit of 70 million yuan, an increase of 255.5% over the same period last year, and a net profit of 50.14 million yuan belonging to shareholders of listed companies, an increase of 217.4% over the same period last year.

Brief comment

The higher growth rate of homed net profit than the growth rate of income is mainly due to the increase in gross profit margin of Internet business.

The company's Internet business revenue was 350 million yuan, an increase of 72.7% over the same period last year, and the Internet business gross profit margin was 36.8%, higher than the 8.3% gross profit margin in the same period last year. Internet business revenue accounts for 58.3% of total revenue. The rapid growth of Internet business gross profit margin, the company's main source of revenue and growth, makes profit growth higher than revenue growth.

The rapid growth of Internet revenue is mainly due to the merger of Ruiyi Evergrande and Shanghai Mobile in April, which has revenue of 50 million yuan and Shanghai Mobile 190 million yuan in the first half.

The main reasons for the rapid increase in gross profit margin are as follows: 1) the structural adjustment of joint venture income and the decrease in the proportion of overseas income, due to the decrease of overseas business income with lower gross profit margin, resulting in an increase in the overall gross profit margin of 100 million Qilian, with a net profit margin of 16.1% in 2017 billion and 10.1% in 2016H in the same period, an increase of 6.1% over the same period last year. 2) the profit margins of the newly merged Ruiyi Hengyuan and Shanghai Mobile are significantly higher than those of the Internet business in the same period of 16 years, with net profit margins of 14.8% and 22.9%, respectively.

The overall growth rate of traditional business is stable.

The total revenue of the company's traditional business e-government and group management and control business was 250 million yuan, an increase of 8.7% over the same period last year. Of this total, e-government revenue was 190 million yuan, an increase of 15.9% over the same period last year, while group management and control income was 50 million yuan, down 16.2% from the same period last year.

E-government continues to give full play to the advantages of focusing on the industry, and further expand and deepen the layout in the fields of finance and taxation, transportation, justice, statistics, people's livelihood, education and so on. In the field of finance and taxation, the upgrading and renovation project of the asset management system of the company's administrative institutions (phase III) and the unified reporting platform project of the Ministry of Finance are all planned to be popularized nationwide in the second half of the year. In the field of transportation, the company relies on the advantages of financial and statistical business to go deep into the traffic layout, and has successively signed tens of millions of projects such as the comprehensive traffic and transport statistical information decision support system of the Ministry of Transport, the financial audit information management system of transportation and the financial management information system of the Civil Aviation Administration and Aviation Administration. In the judicial field, benefiting from the active promotion of the intelligent court by the policy, the solutions built by the company in the intelligent court, such as self-service recording and printing, large screen visualization, remote inquiry and remote tripartite trial, have been rapidly promoted and applied to courts at all levels throughout the country.

The decline in revenue from the group's management and control business compared with the same period last year is mainly affected by factors such as the start-up of some projects or the lag in acceptance. In terms of products, the company released an independently deployable sharing management platform, which realized tax sharing for the first time; on customers, the company successively signed contracts with large groups such as Western Airport Group, Zijin Mining Group, China Railway Construction Corporation, FAW Group, Guangxi Zhongyan and other large groups. and made a breakthrough in the military industry, the company successfully won the bid for the Aerospace Science and Industry Group Financial sharing Service Center project, and signed the Baobang Electric Financial sharing Service Center project.

Investment suggestion

We are optimistic about the layout of the company's traditional software, government and enterprise informatization + digital communication + big data, and believe that the growth rate of the company's software business is expected to remain higher than the industry average and that the synergy effect of business integration of various companies will be brought into full play in the future.