Main points of investment

Items:

The company released the 2018 medium report:

In the first half of 2018, the operating income was 1.197 billion yuan (+ 33.37%), the return net profit was 135 million yuan (+ 54.79%), the non-return net profit was 112 million yuan (+ 29.71%), and the earnings per share was 0.39 yuan (+ 54.80%), which was in line with expectations.

Among them, 2018Q2 realized operating income of 736 million yuan (+ 30.41%), net profit of 137 million yuan (+ 75.44%), and non-return net profit of 116 million yuan (+ 49.31%).

Peace viewpoint:

The performance of the China News is much better than that of the first quarterly report, turning losses into profits. The net profit in the first quarter was-2 million (- 123.51%). The loss was mainly due to the fact that some of the newly expanded scenic spots in 17 years were in the off-season and the project was still in the development period, which was a drag on the overall performance. The reported results improved significantly compared with the first quarter, mainly due to the expansion of the market for industry awareness solutions, the rapid increase in business volume, and the company's disposal of some loss-making scenic spot assets. Among them, the operating income of the industry awareness business was 834 million yuan, an increase of 40.76% over the same period last year, and the revenue of the marine tourism business was 364 million yuan, an increase of 19.05% over the same period last year.

Adjust the development strategy and take over. In the first half of the year, the company identified "leading industry change with digital drive" as the company's development strategy, and replaced the chairman, which was replaced by Mr. Wang Zizheng, the son of the former chairman, Mr. Wang Yusuo. On July 25, the abbreviation of the company's securities was changed from "Beibu Gulf Brigade" to "New Intelligence Cognition". After the adjustment and layout of the business, the industry cognitive solution business with intelligence and security as the core is formed as the company's main business, while ocean tourism routes and other tourism services provide an effective and complementary overall layout for the company's performance.

Dispose of loss-making tourism assets and focus on the main business. The company started to transfer shares in five tourism sub-companies, including Guangxi Hongshuihe Tourism Development Co., Ltd., Qinhuangdao Xinyi Tourism Co., Ltd. By the end of the reporting period, the company has completed the transfer of 60% equity in long Island Tourism Investment and 100% equity transfer in Qinhuangdao Xin Yi Tourism, with a total transfer price of 97.1936 million yuan and confirmed investment income of 16.4238 million yuan. The equity transfer of other subsidiaries is going through relevant formalities. The equity transaction is expected to be completed by the end of the third quarter. After the completion of the equity transfer of the relevant subsidiaries, the company will no longer participate in the operation of the Hongshuihe Scenic spot, the sea tour and the scenic spot operation around Yantai in Qinhuangdao, and can reduce the loss by about 40 million, and the business pattern of "dominated by cognitive business and supplemented by marine tourism route business" will become clearer.

Cognitive business is based on intelligent security and intelligent transportation business, and fosters corporate wisdom and smart tourism business. On the basis of 14 business platforms, including Beijing, Shanghai and Sichuan, which have been laid out in 2017, we have steadily promoted the business of comprehensive solutions for public security informatization, and successfully expanded the business in Xinjiang. Vigorously develop intelligent policing business based on public security big data, build an intelligent policing ecosystem with a trinity of data governance and service platform, big data intelligent modeling engine, and integrated command and dispatching system, and cultivate smart enterprises and smart tourism business, among which the big data system of Weizhou Island Tourism is officially deployed, and the in-depth experience and intelligent service platform of Longhushan Scenic spot completes the launch of APP. During the reporting period, the company actively developed and launched data governance and service platform, big data intelligent modeling engine, integrated command and scheduling platform products, to provide product support for the company's business development.

The trend of marine tourism business is improving. With the improvement of the popularity of Weizhou Island, the passenger volume of the Beiwei route has maintained sustained and steady growth, and the management of the company has taken active marketing measures to overcome the influence of adverse factors such as bad weather, and the number of tourists received by the Beizhou route has increased by 10% compared with the same period last year. The company's profits have been steadily increased; the Beihai-Haikou route continues to maintain the operation mode opposite to the cross-strait joint-stock ships, and the passenger volume is stable.

Investment suggestion: the net profit from 2018 to 2020 will be 377 million yuan, 454 million yuan and 545 million yuan respectively, with year-on-year growth rates of 40.0%, 20.4% and 20.0% respectively. The company's new strategy and new management will bring a new atmosphere, we are optimistic about the company's cognitive business prospects, and the trend of marine tourism business is good, maintaining the "recommended" investment rating.

Risk tips: 1. Competition and technological innovation risk. With the arrival of the "Internet +" era, Internet enterprises have entered the fields of intelligent security, intelligent transportation and smart city, and the traditional information construction manufacturers are facing the challenges of Internet enterprises. The development of industry cognitive solution technology is changing with each passing day, and new technologies, new products and new applications are constantly emerging. if the ability of technological innovation can not continuously meet the needs of business development, it will adversely affect the continuation of Xinzhi's cognitive competitive advantage. 2. Risk of accounts receivable. The main customer groups of the industry cognitive solution business include public security, traffic management departments and system integrators who provide services for public security and traffic management departments. Affected by the long settlement cycle and other industry characteristics, the industry cognitive solution business needs to advance funds to carry out related business. If the local budget is tight and the financial situation of customers is deteriorating, Xin Zhi Cognition may still face the risk that accounts receivable cannot be collected or that the payment time is too long. 3. The bad weather affects the risk of business performance. Due to the influence of natural weather conditions, reduce the willingness of tourists to travel, bad weather, such as typhoons, tsunamis, landslides and other climate, geographical changes and other force majeure has a negative impact on marine routes and scenic spot operations.