I. Overview of events
Recently, the company released its quarterly report for 2017: the company achieved an operating income of 283 million yuan, an increase of 15.40% over the same period last year, and a net profit of 32.29 million yuan belonging to shareholders of listed companies, an increase of 11.28% over the same period last year.
II. Analysis and judgment
The performance is in line with expectations, and the excellent network and ad hoc network business promote stable performance growth.
In the forecast of the company's third quarterly report, the growth rate of return net profit in the first three quarters is expected to be 10-15%. The growth rate of Q3 return net profit is 0-20%. The actual result of the quarterly report is near the average forecast, and the performance is in line with expectations. The company's gross profit margin was 29.1% in the first three quarters, down 0.5% from the same period last year, 28.0% in the same period last year, 1.5% in the same period last year, basically unchanged; fees in the first three quarters were 14.7%, down 1.2% in the same period last year, 17.7% in the Q3 period, up 0.3% from the same period last year, basically unchanged. During the reporting period, the reasons for the steady growth of the company's performance were as follows: the company's business operation was stable, network maintenance and network optimization business were carried out normally, and network maintenance accounted for about 95%. In the operator capital expenditure decline, the company profit in the brand, capital and other advantages, expand new market areas, to cope with the risk of industry gross profit margin decline.
At the same time, the company has won the bid for mobile emergency communications procurement project (10.53 million yuan) and Fujian Armed Police Corps conference communication guarantee project (2.93 million yuan), which has taken a strategic step for the company to expand in the ad hoc network market.
Plan to acquire Guangzhou Oukang to speed up the layout of 5G market
The company intends to acquire 100% equity held by Guangzhou Oukang shareholders Feng Xijun, Xin Rentai and Xin Longxiang. the acquisition will be completed in cash, tentatively set at 210 million yuan, and the shareholding ratio of shareholders will not be diluted by cash acquisition. In terms of performance commitment, the net profit after tax in 2017 is not less than 28 million yuan, the total net profit in the two years from 2017 to 2018 is not less than 60.2 million yuan, and the total net profit in the three years from 2017 to 2019 is not less than 97.23 million yuan, corresponding to the acquisition of PE in 2017-2019 is 7.5,6.5 and 5.7. the acquisition of PE is less than 10 times, which will greatly enhance the performance and strength of the company. Guangzhou Oukang is mainly engaged in communication network engineering and maintenance business, has the qualification of "communication project construction general contracting level", and has strong cooperation with the company, which is in line with the company's positioning of "integrated communication technology service provider" and the market layout of 5G. At the same time, Guangdong Province is the largest and technological frontier market for domestic communication technology services. after this acquisition, the company will enter the Guangdong market, which is of great significance for the future development of the company.
Sign a strategic cooperation framework agreement with an Siyuan to explore the emerging business direction of information security
The signing of the Strategic Cooperation Framework Agreement between the company and an Siyuan is an important measure for the company to explore new businesses such as information security. An Siyuan is an excellent developer of distributed security instant messaging system in China, providing instant messaging deployment and technical support services based on private cloud for party, government, military and state-owned enterprise users. According to the data of the forward-looking Industrial Research Institute, the market size of the domestic information security industry in 2017 is 51.64 billion yuan, a growth rate of 28.1%, and the compound growth rate of 2016-2019 is expected to exceed 30%. The industry will reach 117.9 billion yuan in 2019, and the company will cut into emerging industries with a lot of market space. The establishment of a strategic cooperative relationship between the company and an Siyuan will further integrate their respective advantageous resources and privatize the superior technology of an Siyuan's information security, which is an attempt for the company to actively explore new businesses such as information security. it is conducive for the company to further expand its main business.
Third, profit forecast and investment suggestions
It is estimated that the EPS from 2017 to 2019 is 0.65,0.83,1.04 yuan respectively, and the corresponding PE is 67.52,52.88 and 42.20 times, respectively. As the company is a secondary new stock, the valuation level is relatively high, and the company expands from the region to the whole country and overseas. in view of the expectation of epitaxial mergers and acquisitions, the company is given a certain valuation premium, giving the company 85-90 times PE in 2017, and the reasonable price range for the next 12 months is 55.3-58.5 yuan. Maintain the "highly recommended" rating.
Fourth, risk tips:
The competition for communication network management services is fierce; the expansion of markets at home and abroad is blocked; and the progress of fund-raising investment is not as expected.