1. Events:
On April 23, the company released its annual report for 2017. during the reporting period, the company achieved a total operating income of 1.077 billion yuan, an increase of 62.46% over the same period last year, and a total profit of 167 million yuan, an increase of 21.96% over the same period last year. The net profit of shareholders belonging to the parent company was 149 million yuan, an increase of 36.26% over the same period last year.
two。 Comments:
The performance increased steadily, the Tang Dynasty Digital caused impairment of goodwill due to accounting treatment, and the actual operation increased steadily.
In 2017, the company's total revenue was 1.077 billion yuan, of which information security business and cultural and entertainment business maintained a rapid growth rate, up 108.33% and 214.22% respectively over the same period last year.
The main reason for the formation of non-recurrent gains and losses: the company acquired a 100% stake in Tang Ren Digital in 2015. According to the acquisition agreement, if the total non-net profit deducted by Tang Digital for 14-17 years exceeds 310 million yuan, the purchase price will be adjusted to 1.332 times the original purchase price, that is, the consideration of the transaction will be adjusted from 602 million yuan to 802 million yuan, and the increased consideration will be 200 million yuan. Because on the surface of the 15-year parent company report, 200 million yuan is recognized as an estimated liability, while the long-term equity investment in Tang Digital is increased by 200 million yuan. At the level of the consolidated statement, the consolidated goodwill is increased by 200 million yuan, and the estimated liability is confirmed at the same time 200 million yuan. This time, the performance commitment expires, and the total non-net profit deducted by Tang Digital for 14-17 years is 236 million yuan, which does not reach 310 million yuan, which does not meet the agreement in the transaction report, and the company does not need to pay the estimated liability of 200 million yuan. Therefore, the impairment loss of goodwill of 200 million yuan is included in the current recurrent profit and loss, which has a greater impact on the company's 17-year non-recurrent profit and loss.
This impairment is not because the performance is not up to expectations, but because the accounting treatment causes a contingent consideration of 200 million yuan without payment, resulting in a non-operating income of 200 million yuan, while goodwill provision for impairment is 200 million yuan. By the end of the reporting period, the total number of registered users of Tang Renyou had reached 8.4738 million, the average number of monthly active users in 2017 was about 64300, and the number of households paying monthly fees was about 13700, maintaining a good growth.
The equity incentive plan promotes R & D breakthroughs and promotes the company's strategic development. On April 15, the company announced the 2018 restricted stock incentive plan (draft), which intends to grant 8.96 million restricted shares to 256people, of which 8.14 million shares are granted for the first time and 820000 shares are reserved. The price is 6.91 yuan per share. As a leading "cyberspace data governance expert" in China, Ren Zixing will help to further increase R & D investment in the field of cyber security and big data through this incentive program. Focus on public security big data control platform, Internet big data anti-fraud system, Internet public opinion management and public opinion guidance system and other areas to achieve major breakthroughs, which is of great significance for the company's strategic development. In addition, the incentive plan will also strictly assess the performance at the individual level, and promote the strategic development of the company by assessment goal-oriented.
Profoundly implement the technological innovation strategy, technology and platform have been recognized by the Ministry of Industry and Information Technology / Shenzhen and other parties.
The company has been sparing no effort to carry out independent research and development and technology investment, and has achieved many achievements in the past 17 years, and has been recognized by Shenzhen, the Ministry of Industry and Information Technology and telecommunications departments.
For example, the "Mobile Internet Application Audit and Comprehensive processing platform" declared by the company won the first prize of Shenzhen Science and Technology Progress Award; the company was approved to build the "Network Space Governance Technology National Local Joint Engineering Research Center (Shenzhen)". It has achieved a major breakthrough in the company's major national scientific and technological innovation platform in recent years; Beijing Yahong, a wholly-owned subsidiary of the company, was shortlisted for the network security pilot demonstration project of the Ministry of Industry and Information Technology in 2017. The establishment of these awards and platforms means that the company's technical strength and service capabilities have been recognized by many parties, laying a good foundation for future transformation into performance.
Telecom / Internet anti-fraud system and Internet financial monitoring platform have become an important starting point for network security data value-added services, achieving major breakthroughs.
In recent years, telecom fraud has been reported many times by CCTV and other mainstream media, and has also been the focus of the Ministry of Industry and Information Technology. Beijing Yahong launched the telecom / Internet anti-fraud system according to customer pain points, which was highly recognized by customers. the business achieved a contract value of 80.52 million yuan for the whole year, achieving rapid growth. At the same time, the Internet financial monitoring platform developed by the principal division of the company and the products of Beijing Yahong have been combined to build a financial data cloud center platform, which has strongly supported Yahong's Internet anti-fraud projects in various provinces. We believe that telecom / Internet anti-fraud and Internet financial monitoring platform business will become an important starting point for the company to realize network security data value-added services through big data technology. it has achieved an important milestone in the expansion of the company from "cyberspace data governance" to "cyberspace data value-added services", which is of great significance.
Macro policy continues to increase, Ren Zixing strategy is highly in line with the national strategy at the macro policy level, catalyzed by the Sino-US trade war, ZTE banned sales and other events, the national attention to network security and informatization is increasing. In June 2017, with the formal implementation of the Network Security Law, the network security industry ushered in a historic opportunity, the industry is expected to flourish, and China is moving forward from a network power to a network power. In March 2018, the Central Internet Information Office and the Securities Regulatory Commission jointly issued the "guidance on promoting the Construction of Capital Market Service Network Power", proposing to give full play to the important role of capital market in resource allocation, establish and improve inter-departmental work coordination mechanism, and standardize and promote the innovation and development of Internet information enterprises. We believe that Ren Zixing, centering on the strategic goal of "promoting network power and building digital China", deeply ploughing network security and informatization is in line with the new strategy of the new era, and is expected to achieve take-off development with the help of the capital market.
3. Profit forecast and valuation
We estimate that the company's operating income for 18-20 years is 13.35,16.29,1.971 billion yuan respectively, and the return net profit is 1.63,1.94,234 million yuan respectively, and the corresponding basic earnings per share are 0.36,0.43,0.52 yuan respectively.
Risk Tips:
The company's technological development is not as good as expected.