Incident: The company announced that it achieved revenue of 241 million yuan in 2017, an increase of 12.85% over the previous year; Guimu's net profit was 452.31 million yuan, a slight decrease of 6.88% over the previous year. In Q1 2018, revenue was 815.2687 million yuan, an increase of 15.97% over the previous year; the net profit of the mother was 27.5912 million yuan, an increase of 475.38% over the previous year. The rapid increase in net profit in Q1 2018 was due to confirmed revenue from several high-margin projects.
Comment:
The AFC business is progressing steadily, and there is huge room for value-added services for scanning codes and riding cars with the advantage of card slots. As a pioneer in the field of AFC equipment segmentation, it first expanded from automatic rail transit ticketing systems to transportation scenarios such as BRT and buses, and spread regionally across domestic and Southeast Asian markets. At a time when giants such as Ali, Tencent, and UnionPay are making all-out efforts to scan codes to ride, the company has taken advantage of many years of card space advantages to become the master package for the transformation of code-scanning ride-hailing systems in Shanghai, Xiamen, etc., and has accelerated its promotion to the whole country. As a small-dollar ultra-high-frequency payment scenario, subway travel “scan the code to ride the subway” accumulates a large amount of user traffic and data, which will lay the foundation for subsequent value-added services. During the reporting period, the company collaborated strategically with Tencent, and its participating subsidiaries received strategic investment from Qihoo 360, making it worth looking forward to new profit models such as payment bill sharing and advertising business division after successful code scanning.
With the acquisition of Guozhengtong, the synergy between travel scenarios and big data for identity authentication is obvious. During the reporting period, the company's major asset restructuring was over with Guozhengtong. As one of the earliest big data companies providing anti-fraud services from multiple data sources in China, the scenario covered telecommunications, finance, networks, security, education, medical and other industries.
With this acquisition, the company can use its authoritative information resources to quickly verify the identity of gate passers-by data, greatly improve traffic efficiency, and further build a comprehensive data security ecosystem of “data acquisition - identity authentication - security protection” for anti-terrorism investigation and crime prevention and control. Under the big trend of real-name verification, the company pointed its finger at the big data business and used resources to form a rivalry with the original AFC business, with broad prospects for development.
Investment advice: The company is a leading AFC equipment provider in China. Together with Tencent and 360, the company will quickly improve the subway “scan code payment” layout and subsequent value-added services. The acquisition of the National Government Administration will be successful, and there is great potential to build a secure data ecosystem and enter the big data industry later. We expect EPS to be 1.32 and 1.90 yuan to prepare for the 2018 and 2019 exams, maintain the “buy-A” rating, and target price of 35 yuan for 6 months.
Risk warning: mobile payment policy risks; AFC industry innovation falls short of expectations.