Main points of investment

The company is a leading enterprise in the domestic e-government industry: the company has ploughed the e-government industry for nearly 20 years, and has grown into a leading domestic e-government enterprise after years of development. The company has accumulated many high-quality customers in the e-government industry, and has built a competitive advantage in the fields of finance and taxation, statistics, transportation, justice, people's livelihood and other subdivided industries. Customers in e-government industry have strong customer stickiness because of data continuity, security, software investment, replacement cost and other factors. Years of technology accumulation and deep ploughing in the industry have built higher business barriers for the company and formed a strong core competitiveness of the company in the e-government industry. According to Zhiyan consulting data, the investment scale of China's e-government market has maintained a rapid development, with a year-on-year growth rate of 15.81% in 2016. As a leading company in the domestic e-government industry, the company benefits from the growth of the industry investment scale, and the company's e-government business will continue to grow rapidly in the future.

With the frequent development of extension, the layout of the company's digital communication business is becoming more and more perfect: while the company continues to strengthen the traditional main e-government business, it is also actively laying out the field of digital communication. In September 2014, the company invested in the establishment of a holding subsidiary Jiuqi Zhitong, which further strengthened the company's technical experience and strength in the field of big data application analysis, especially cloud networking big data, and reserved big data's technical strength for the company to develop digital communication business. From 2015 to 2017, the company initially realized its strategic layout in the field of digital communication through a series of acquisitions (Yiqilian Technology, Ruiyi constant Motion, Shanghai Mobile). The company makes efforts to big data-driven digital communication business, the integration of big data and marketing, the company's digital communication business has become a strong driving force for the company's performance growth.

At present, China's network marketing industry is in the stage of rapid development. According to iResearch, China's cloud online advertising market exceeded 290 billion yuan in 2016, an increase of 32.85% over the same period last year. By 2019, China's cloud online advertising market will reach 631.99 billion yuan. From 2012 to 2019, the CAGR of China's cloud online advertising market was 35%. Driven by the rapid growth of the industry, combined with the company's increasingly perfect business layout in the field of digital communication, we believe that the company's digital communication business will continue to grow at a high speed in the future.

Set up Jiujin Institute and Jiujinbao to expand cloud-connected financial business: in the process of ploughing e-government and group management and control business, the company has seen some practical needs of large enterprise group customers in the process of development. According to the actual needs of customers, the company lays out the cloud-connected financial business. In May 2015 and March 2016, the company set up Jiujin Institute and Jiujin Bao respectively to provide supply chain financial services for large enterprise group customers and personal P2P financial services such as employee loans for their employees. At present, the domestic supply chain financial segment market demand is strong. According to the China Industry Information Network, supply chain finance has filled 8% of the 20% gap in the financing market. By 2020, the size of China's supply chain financial market will reach 15 trillion. The establishment of Jiujin Institute and Jiujinbao and the layout of cloud-connected financial business, on the one hand, can enhance the company's profitability, on the other hand, it will help to strengthen the cooperative relationship with existing enterprise group customers and lay a solid foundation for follow-up business development. In the first half of 2017, the balance of factoring receivable resulting from the factoring business of Jiujin Insurance was 91.6008 million yuan, an increase of 37.68 per cent over the beginning of 2017. The company's cloud-connected financial business has a good momentum of development.

Profit forecast and investment advice: we expect the EPS of the company from 2017 to 2019 to be 0.49,0.65,0.86 yuan respectively, and the PE corresponding to the closing price on September 27 is about 24.6,18.6,14.2 times respectively. The company is a leading enterprise in China's e-government industry, and has obvious competitive advantages in finance and taxation, statistics, transportation, justice, people's livelihood and other sub-industries. At present, the investment scale of China's e-government market has maintained a rapid development, and the company's e-government business can continue to grow rapidly in the future. Since 2015, the company has initially realized its strategic layout in the field of digital communication through a series of mergers and acquisitions. Driven by the high growth of the digital communication industry, combined with the company's increasingly perfect business layout in the field of digital communication, the company's digital communication business will be another powerful driving force for the company's sustained and high growth. The company has set up Jiujin Institute and Jiujinbao to expand cloud-connected financial business, and the current development momentum is good. We are optimistic about the future development of the company, covering it for the first time and giving it a "recommended" rating.

Risk hint: the development of e-government business is not up to expectations; the development of digital communication business is not up to expectations; the development of cloud-connected financial services is not up to expectations.