Events:
Company announcement: the company achieved income of 3.915 billion yuan in the first three quarters, an increase of 25% over the same period last year, a net profit of 189 million yuan, an increase of 650% over the same period last year, and a deduction of 78.11 million yuan in non-net profit, an increase of 298% over the same period last year.
Main points of investment:
The growth rate of cloud computing business is relatively high, and the gross profit margin has improved slightly: the company's revenue for the whole year increased year-on-year, including 3.5 billion yuan for enterprise IT system solutions, an increase of 15% over the same period last year, and 419 million yuan for cloud computing products and services, an increase of 395% over the same period last year. On the one hand, the higher growth rate of cloud computing benefits from the acquisition of GD, which is strong in cloud computing and big data, on the other hand, the company's own brand and computing basic software and hardware have also achieved good growth. The overall gross profit margin of the company has increased by 0.04%. It is worth noting that the gross profit margin of IT solution business, which accounts for a large proportion of revenue, has dropped by 1.77%, and the gross profit margin of cloud computing business has increased by 3.63% to 35%. The gross profit margin of cloud computing business is significantly higher than that of the company as a whole. In the future, with the expansion of cloud computing business, the company's overall gross profit margin is expected to continue to improve, thereby enhancing profitability.
The investment income has a great impact on the profit, deducting the non-net profit to maintain a high growth rate: the company's return net profit is significantly higher than the revenue growth rate, mainly because the company disposed of part of its Rand network stake in the first three quarters. Rand Network became a joint venture recognized by equity law, and the company recognized the profit and loss of the remaining equity re-measured at fair value, and confirmed the profit and loss of GRC Tiancheng. The investment income in the first three quarters reached 220 million yuan, which had a great impact on the company's net profit. This can also explain that the largest share of non-recurrent income in the first three quarters is the profit and loss on disposal of non-current assets, but after deducting non-recurrent profit and loss, the company still maintains a relatively high growth rate of 298%, reflecting the overall improvement in business profitability.
The company's business continues to transform and upgrade, and the fundamental improvement is worth looking forward to: since the beginning of this year, the company has continued to increase the development and promotion of cloud computing basic software and hardware products. The semi-annual report shows that the newly signed contract value of its Power server has increased by 80%. It has also enhanced its strength in overseas cloud computing and big data through the acquisition of GD, and the two sides have also produced some coordination in sales. In addition, the company acquires Tailing Microelectronics through the Internet of things M & A fund. Tailing Microelectronics is committed to developing high-performance and low-power wireless Internet of things SOC chips, which is in the forefront of the industry in the research and development of multimode Internet of things chips. the company plans to rely on the core technology of Tailing micro-Internet of things chips, combined with the industry Internet of things platform, to build a new business model of tight coupling of Internet of things and big data, and further promote business upgrading. Explore new business growth points. Follow-up company fundamentals can be improved.
Profit forecast and investment rating: maintain the "overweight" rating company's cloud computing business to achieve a high growth rate, and its deduction of non-net profit has achieved a higher-than-expected growth rate. We focus on the company's follow-up business progress. It is estimated that the company's EPS in 2017-2019 will be 0.21 EPS 0.19pm 0.22 yuan, corresponding to the PE valuation of 50-55-47, respectively, maintaining the "overweight" rating.
Risk hints: (1) the risk that the company's performance falls short of expectations; (2) market systemic risk.