The performance is in line with expectations. The company released its annual report for 2017, with an operating income of 1.077 billion yuan, an increase of 62.46% over the same period last year, a net profit of 149 million yuan, an increase of 36.26% over the same period last year, and a net profit of-46 million yuan, a decrease of 149.64%. In the 2017 consolidated statement, the estimated liability amount of 200.02 million yuan that does not need to be paid is fully included in non-operating income, while the provision for impairment of goodwill is 200.02 million yuan, which has no impact on the overall net profit of the company. The non-operating income of 200.02 million yuan is included in the current non-recurrent profit and loss, and the goodwill impairment loss of 200.02 million yuan is included in the current recurrent profit and loss, which has a great impact on the company's current non-recurrent profit and loss.
Another company released its quarterly report for 2018, with operating income of 214 million yuan, down 2.73% from the same period last year, and net profit of 11 million yuan, an increase of 8.76% over the same period last year.
The company is committed to becoming a leading "cyberspace data governance expert" in China. The company focuses on network security governance business through endogenous extension. It has created a perfect network security product line, such as public network security solutions, network capital management solutions, public opinion management solutions, network information security solutions and so on. According to the company announcement, the company will focus on building a public security big data platform and an Internet financial monitoring platform in the future. The company is expected to benefit from increased emphasis and investment in self-control and cyber security.
Layout of public security big data, to assist public security departments to improve business efficiency. The company mainly provides "big data Application Analysis platform for single Police at Provincial and Municipal level" and "big data Application Analysis platform for all Police types of Public Security organs at City and District and County level". To provide customers in the public security industry with a set of practical big data platform based on police big data integration access management, data governance, data mining analysis, data intelligent application. Relying on the core key technologies of network security, big data leads the reform and innovation of policing, improves the ability of early warning, prediction and prevention of public security departments and the actual combat level of prevention and control, and realizes holographic intelligence, command visualization, three-dimensional prevention and control, and combat synthesis.
Investment advice: be optimistic about the company's layout of network security data governance in the future. We estimate that the company's EPS from 2018 to 2019 will be 0.43 yuan and 0.54 yuan respectively. For the first time, we will give an investment rating of-A, with a 6-month target price of 18 yuan.
Risk hint: M & A companies can not fulfill their performance commitments; cyber security business progress is not as expected.