Net profit in the first three quarters increased by 333% over the same period last year, in line with expectations.
Kangqi Co., Ltd. announced its results for the first three quarters: operating income was 1.353 billion yuan, up 144% from the same period last year; net profit belonging to the parent company was 187 million yuan, up 333% from the same period last year, corresponding to 0.36 yuan per share, which was the upper limit of the previous forecast. On a quarterly basis, Q1/Q2/Q3 revenue + 124% Universe "136% Universe" 171%, net profit + 504% Plus "203% Plus" 381%. At the same time, the company announced that it plans to invest 300 million yuan to set up an online micro-loan joint venture company, accounting for 60% of the shares.
Trend of development
1. The revenue side has accelerated quarter by quarter, and the traditional lens business has grown steadily. The company's revenue in the first three quarters increased by 144% compared with the same period last year, including 171% year-on-year growth in the third quarter, showing a quarterly acceleration trend (Q1/Q2 + 124% respectively compared with the same period last year), mainly due to the impact of flag and smart tables.
In addition, the company continues to open up the market, optimize the product structure, and constantly enhance the comprehensive competitiveness of the lens business. the traditional resin lens business income has increased in the first three quarters, and the company announced in September that it will increase its capital by 220 million yuan. The fourth quarter is expected to continue the steady development trend.
2. The intelligence of the flag plan and the profitability have been greatly improved, and the cost control needs to be strengthened. As the proportion of bank card value-added business revenue with high gross margin gradually increased, the company's gross profit margin in the first three quarters rose sharply to 50.3% compared with the same period last year (Q3 further increased to 53%). During the period, the expense rate increased to 35% from the same period last year, with sales / management / financial rates + 15/-1.8/-1ppt, respectively. The non-recurrent profit and loss in the first three quarters was 30.39 million yuan, mainly subsidized by the government.
Taken together, the net interest rate increased by 6ppt to 13.8% in the first three quarters, while the profit side of the smart and post-balance sheet increased significantly.
3. Continue to deepen the layout of the financial sector. Among them, it was announced in September that the listed parent company would no longer directly operate the lens business, divested the relevant business to the wholly-owned subsidiary Cornette Optics, and hired a senior executive of Flag Intelligence as the general manager of the company; in October, it was proposed to set up a network small loan joint venture company, which is expected to work well with Flag Intelligence to cultivate new growth points, and the layout of the financial sector continues to deepen. Flag Smart promises that the non-attributable net profit deducted in 2018 will be no less than 245 million yuan, and the performance in the fourth quarter is worth looking forward to.
Profit forecast
We keep our earnings per share forecast for 2017 / 2018 unchanged.
Valuation and suggestion
At present, the company's share price is equivalent to 31 times Pram E in 2017. We maintain our recommended rating and target price of 23.00 yuan, which is 36.01% higher than the current share price. Follow up to pay attention to the financial business development of Flag Intelligence and the completion of committed performance.
Risk
Flag intelligence performance is lower than expected; exchange loss; international market risk.
