Event: on October 21, 2017, Sichuan University Zhisheng released the third quarter report of 2017, the company realized operating income of 154 million yuan in the first three quarters of 2017, down 24.70% from the same period last year, and realized net profit of 21.063 million yuan belonging to the shareholders of the parent company, up 1.87% from the same period last year. Basic earnings per share were 0.0934 yuan, up 1.97% from the same period last year.
Comments:
The performance in the third quarter is basically stable, and the profit for the whole year is expected to improve. In the third quarter of 2017, the company achieved operating income of 56.383 million yuan, down 9.13% from the same period last year, and realized net profit of 7.359 million yuan, up 3.09% from the same period last year. The company's performance in the third quarter was significantly better than that in the first half of the year, mainly affected by factors such as the reduction of the scope of consolidation in the first half of the year. On the whole, the company's operation is relatively stable compared with the same period last year. From the perspective of historical performance, the company's operation is obviously seasonal, and the company's revenue and profits account for the largest proportion in the fourth quarter, which has the greatest impact on the annual performance. The company expects to achieve a net profit of 44.7246 million yuan to 52.5028 million yuan for the whole of 2017, an increase of 15% to 35% over the same period last year. We believe that the development of the company's traditional air traffic control business and flight simulation training business is stable, and the future launch of the new product automatic air traffic control system SAE3.0 is expected to promote performance growth. In addition, the layout of the company in artificial intelligence is also expected to usher in a performance harvest period, which is expected to bring new performance increments for the company.
It is proposed to issue a stock option incentive plan to maintain confidence in the steady growth of performance. In early September this year, the company issued a draft of equity incentive, which intends to grant a total of 8 million stock options to the incentive target. The performance condition of option exercise is based on 2016 net profit, and the growth rate of net profit in the next four years is not less than 15.00%, 32.25%, 52.09% and 74.90%, respectively. The exercise condition puts forward the requirement of stable growth of net profit, which reflects the company's confidence in the sustainable development in the future. This also helps to enhance the attractiveness of the company to talents in the industry and plays a positive role in the construction and stability of the core team.
Earnings forecast and rating: we expect the company's operating income for 2017-2019 to be 3.52,4.23 and 507 million yuan respectively, and the net profit attributable to the parent company to be 4560 yuan, 5296 yuan and 62.34 million yuan respectively. Based on the latest share capital of 226 million shares, the earnings per share are 0.20,0.23,0.28 yuan respectively, and the latest share price corresponds to 121,105,89 times of PE respectively, maintaining the "hold" rating.
Risk factors: new product market performance is not as expected; brain drain risk; R & D progress is not as expected; order delivery is not as expected.