I. Overview of events
On October 28, the company released the third quarterly report of 2017: (1) 2017Q3 realized revenue of 456 million, an increase of 47.82% over the same period last year, and a net profit of 95 million, an increase of 57.5% over the same period last year. The net profit of non-return was 69 million, an increase of 15.91% over the same period last year. (2) the revenue in the first three quarters was 1.055 billion, an increase of 42.08% over the same period last year, and the net profit was 145 million, an increase of 90.64% over the same period last year. The net profit of non-return was 116 million, an increase of 59.73% over the same period last year; (3) the annual net profit was expected to be 3-360 million, an increase of 37.23% and 64.68%.
II. Analysis and judgment
The performance is in line with the expectations of the China report, and excluding the consolidation factor, the annual growth can reach 15% and 35%.
1. The performance is in line with the expectations of the China News, and the performance of the digital communication plate is outstanding. (1) in the semi-annual report, it is predicted that the return net profit in the first three quarters is 135 million-170 million, and the net profit in the first three quarters is 145 million in line with expectations. According to the main business sectors: e-government / group control / digital communication to achieve business income of 305 million / 90 million / 630 million yuan respectively (2) the e-government revenue is the same as the same period last year, and the group management and control income decreased slightly from the same period last year, mainly due to the late start of some projects in the first year of the 13th five-year Plan. Digital communication business revenue accounted for 60%, an increase of 94% over the same period last year. Affected by Ruiyi constant movement and Shanghai transfer factors are obvious, from the annual performance forecast, restore and table factors, net profit increase of about 15% 35% (3) if the convertible bonds are successfully issued, the financial expenses will affect part of the net profit. The company successfully issued convertible bonds in June and set aside more than $10 million in financial expenses in the third quarter, which partly affected the growth of net profit.
The extension helps significantly to ensure the realization of the annual performance.
The main results are as follows: 1. The potential of integration resources is released, and the endogenesis is enhanced after extension integration. (1) the company entered the digital communication business through epitaxial acquisitions, acquiring Yiqilian, Ruiyi Hengdong and Shanghai Mobile in turn, and established its digital communications for a long time in the first half of the year to coordinate the integration of its sub-brand resources, build an Internet brand and dock with the original government and enterprise customers; (2) the construction of the platform is progressing smoothly and releasing growth potential. At present, the advertising flow platform, programmed purchase platform, channel agency platform and self-media platform that have been prepared for construction are advancing steadily, and the digital communication level has begun to release the growth potential.
2, and express Ruiyi constant moving and Shanghai Mobile, optimistic about the annual performance commitment to meet expectations. (1) Ruiyi constant movement and table factors are obvious in the first three quarters (in August 2016), with a performance achievement rate of 104.5% in 2017. the annual performance commitment for 2017 is 19.5 million; (2) in the third quarter, the net profit of Shanghai Mobile (April) is good, and the annual performance commitment for 2016 is 104 million. According to the past performance analysis, it is optimistic that the annual results will meet expectations.
300 million Qilian actively adjusts its business structure and is expected to make efforts in the fourth quarter. In the first three quarters, Yiqilian achieved a profit of 51.09 million yuan, an increase of 46% over the same period last year, accounting for 60.6% of the annual performance commitment of 84.3 million. The achievement rate of performance in 2014-2016 was 87.85%, 100.57% and 98.08%, respectively. According to the type of customers, the company adjusts and optimizes the tools, games and e-commerce business, and promotes the overseas business of brands such as people's Daily online and Tourism Bureau, strengthens the accuracy of R & D investment, and actively integrates marketing and promotion. the business is going smoothly, and the business is expected to continue to develop in the fourth quarter.
Finance, transportation and other endogenous businesses have grown steadily, and the business transformation of smart courts has been successful.
1. Financial and transportation orders have landed one after another, thickening the foundation of annual performance. The company deeply ploughs the major customers of the Ministry of Finance and the Ministry of Communications, and has obvious advantages in departmental final accounts, statements, asset management and other business. (1) the company won the bid for the third phase of the asset management project of the Ministry of Finance in November 2016 and the uniform statement project of the Ministry of Finance in December.
At present, the unified statement project is in the stage of reviewing and determining the implementation plan, and the third phase of asset management project will start trial operation in the fourth quarter, laying the foundation for continuous receipt of orders; (2) exploring the Ministry of Communications's "13th five-year Plan" information planning, on the basis of continuing to expand the four major transportation projects and mature business such as financial management, asset management and decision analysis platform, focus on the layout of traffic data center, traffic administrative law enforcement platform and other business. This year, the company has won the bid for the financial management system of the Civil Aviation Administration, the financial audit system of the Information Center of the Ministry of Communications, the comprehensive transportation statistics system and other major projects, with a contract value of more than 20 million yuan. And the civil aviation comprehensive statistical information system software development project, Hunan highway waterway construction and waterway transport market credit system engineering project have been checked and accepted in turn, thickening the growth foundation of e-government business.
2. With the transformation from a science and technology court to a smart court, Huaxia Dentsu has no worries about its annual performance. Since 2016, Huaxia Dentsu has realized the transformation from science and technology court to wisdom court through the construction of artificial intelligence technology and cloud platform, and smart court products have been applied in Shanxi, Liaoning, Shandong, Jiangsu and other places. There are more than 3500 courts across the country, and the coverage rate of product users is more than 50%. The business transformation of Huaxia Dentsu in the first three quarters was smooth, with a net profit of nearly 60 million, with an annual performance commitment of 78 million in 2017 and an achievement rate of 116% in 2016. according to the seasonal characteristics of the industry, it is highly likely to complete the annual performance commitment.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 is 0.50,0.66 and 0.85 yuan respectively, and the current share price is corresponding to 25x, 19x and 15x, respectively. Based on the strong stickiness of government and enterprise customers such as finance and transportation, the smooth development of the intelligent court business, and the huge room for the growth of the integrated digital communication business, the company was given 30-35 times PE in 2017 and a reasonable valuation of 15,017.5 yuan in the next six months, maintaining the company's "highly recommended" rating.
Fourth, risk tips:
Policy promotion is not as expected; the speed of technology research and development is not as expected; business integration is not ideal.