occurrences
Huasheng Tiancheng Company (hereinafter referred to as the “Company”) disclosed the signing of a major contract announcement on March 26. The company's participating enterprise, Beijing Huasheng Tiancheng Information Technology Development Co., Ltd. (hereinafter referred to as “Huasheng Information”), undertook independent R&D and production projects for clients' network communication products, and Huasheng Information entrusted the company to purchase devices and equipment related to the project. From January 1, 2018 to the date of this announcement, the two parties have signed product purchase and sale contracts totaling approximately 1,026 million yuan. All of the above contracts are expected to be completed in 2018, which will have a positive impact on the company's annual operating results.
A leading enterprise IT service company with obvious customer base advantages
The company has nearly 20 years of deep industry experience in the field of enterprise-level IT services. It has established a good industry customer base in fields with strict reliability requirements such as government, finance, telecom operators, energy, etc., and has a global enterprise-level customer service and technical support network to provide users with safe and reliable IT system services. Due to the strong continuity of enterprise-level IT industry services and high customer resource barriers, it is easy to form long-term stable partnerships. The continuous accumulation of high-quality customers can not only bring stable revenue from enterprise-level IT services to the company, but also effectively support the company's new business and product sales.
The 2017 annual performance is expected to increase, and the effects of transforming cloud computing are obvious
On the evening of January 23, the company announced that it expects to achieve net profit of about 225 million yuan to 235 million yuan in 2017, an increase of about 525%-553% over the previous year, and net profit returned to the mother after deduction of about 111 million yuan, an increase of about 754% over the previous year.
The revenue of the cloud computing products and services sector in the first three quarters was 419 million yuan, with a year-on-year growth rate of 395.46%; annual revenue is expected to reach about 800 million yuan. Influenced positively by the rapid development of the cloud computing market and the continuous promotion of localization and autonomy policies of information technology products, the company's own branded cloud computing products and business grew rapidly in 2017. The gross margin of business in this sector is high. As market growth enters a period of acceleration, we expect the company's cloud computing business revenue share to continue to increase, which will effectively drive the company's overall performance.
Catalyzed by big orders, performance can be expected to improve in 2018
The order amount of 1,026 million yuan announced by the company on March 26 accounted for 21.38% of its audited revenue in 2016. Currently, the company's business direction covers cloud computing, big data, mobile Internet, the Internet of Things, information security, etc. The business areas cover various IT service businesses such as IT commercialization services, application software development, system integration and value-added distribution. Combined with the continuous promotion of independent external policies, the continuous growth of China's cloud computing demand, and the accelerated pace of implementation of the national digital China strategy, we believe that the company's fundamentals can be expected to continue to improve in the future.
Investment advice
I am optimistic that the company will comprehensively transform next-generation information technology such as cloud computing based on the advantages of enterprise customers brought about by the accumulation of enterprise-level IT services over the years, combined with the catalysis of large orders from traditional businesses, and enter a rapid growth trajectory. Net profit is expected to be 339/472 million yuan in 2018/2019, EPS of 0.31/0.43 yuan, corresponding to a price-earnings ratio of 38.21/27.47 times. First coverage, giving a “buy” rating.
Risk warning: The development of cloud computing business fell short of expectations, and the gross margin of traditional business declined