Incidents:
The company released its 2017 annual performance forecast. It is expected that the company will achieve net profit of 34 million yuan to 37 million yuan in 2017, an increase of 13.30%-23.30% over the previous year. The impact of the company's non-recurring profit and loss on the company's net profit in 2017 is estimated to be about 7 million yuan.
Comment:
Performance has grown steadily, and the company's performance has remained relatively stable since listing. The main reason for the decline in the company's net profit in 2016 was that government subsidies were reduced compared to previous years and that restricted stock incentives generated 10.46 million equity amortization expenses that dragged down performance. In 17, when the company's equity incentive amortization amortization was 10.25 million, deducting non-net profit increased 13.30%-23.30% over 2016, and the company's development continued to improve.
The integrated two-wing strategy progressed steadily, and the market share increased steadily. Food safety traceability (integrated), archival informatization business, and political and legal informatization (two wings) were the company's three main businesses. As of 2017 H1, the company had won 24 bids out of five batches of 58 pilot cities that had already been tendered nationwide, with a market share of 40%, ranking first in the country; 5 new archival bureau customers above the sub-provincial level were added, and the data processing market coverage in Shanghai and Jiangsu regional prisons reached 100%.
Food traceability is becoming more and more popular, and its competitive advantage is remarkable. Through the established SAAS application center, data analysis center and decision support center, the company has developed food traceability capabilities throughout the production base, warehousing and logistics, commercial distribution, and terminal consumption. It is the first certified traceability service provider in China. At present, food traceability has gradually begun to shift from pilot projects and government leadership to normalization and marketization. The company has reached in-depth cooperation with traditional fresh food companies and new retail companies such as Hema Fresh, Easy Cook Era, Food & Fresh, Zhengtian Member Store, Da Runfa, Shangvegetable Group, and Meitan Group to jointly build a food traceability ecosystem.
Profit forecasting and valuation analysis:
It is estimated that in 2017-2019, the company will achieve net profit of 3,600, 6200, 81 million yuan, corresponding to EPS 0.53, 0.91, 1.19 yuan, corresponding to PE 71, 41, 31 times, and given a “increase in holdings” rating.
Risk analysis:
Track the progress of cloud business falls short of expectations, policy risks, and competition intensifies