Main points of investment

Event: the company announced that its revenue in the first half of 2018 was 1.197 billion yuan, an increase of 33.37% over the same period last year, and its net profit was 135 million yuan, up 54.79% from the same period last year (the performance forecast was 43% 55%), deducting 112 million yuan from non-home net profit, an increase of 29.71% over the same period last year, and the net cash flow of operating activities was-309 million yuan, down 12.14% from the same period last year. Among them, Q2 revenue and homecoming net profit increased by 30.41% and 75.44% respectively compared with the same period last year; it is expected that the growth rate of homing net profit in the first three quarters of 18 is 40% to 55%.

Comments:

During the reporting period, the company identified "leading industry change with digital drive" as the company's development strategy, and after the adjustment and layout of the business, the industry cognitive solution business with intelligence and security as the core was formed as the company's main business. Ocean tourism routes and other tourism service business to provide effective supplement for the company's performance of the overall layout, at the same time, adjust the senior management team Identified the technology-led executive team and completed the renaming of the company. The company achieved revenue of 1.197 billion yuan in the first half of the year, an increase of 33.37% over the same period last year. Among them, through the active expansion of intelligent public security and bright engineering business, the business volume of industry cognitive solutions continued to increase, and the revenue of industry cognitive business was 834 million yuan, an increase of 40.76% over the same period last year. The passenger traffic volume of the North Taiwan route increased steadily, and the revenue of marine tourism business reached 364 million yuan, an increase of 19.05% over the same period last year. The industry recognized net profit of 107.5829 million yuan, an increase of 54.40% over the same period last year, and continued to maintain rapid growth.

Tourism business focuses on the operation of high-quality resources and strips off non-core assets. At present, the company is mainly engaged in "Beihai-Weizhou Island", "Beihai-Haikou", "Penglai-long Island" three high-quality marine tourism routes and surrounding related route business, at the same time, it has the right to operate car-raft tourism resources in Longhushan, a 5A-level scenic spot in Jiangxi; in determining the main business climate of science and technology, start the disposal of non-core assets such as travel agencies, some scenic spots and sea tours in the northern region.

The increase in the proportion of science and technology business led to a decrease in gross profit margin (2.41pct), an increase in overall expense rate (1.27pct), an increase in management expense rate (3.98pct), and a decrease in sales expense rate (3.98pct). This is mainly due to the transfer of industry awareness solution business R & D expenses to management expenses R & D expenditure, tourism intermediary related expenses led to an increase in management expense rate, in addition, the increase in borrowing led to an increase in financial expense rate 1.32pct. Accounts receivable increased by 10.65% over the beginning of the year, lower than the revenue growth rate, accounting for 121.72% of revenue, and decreased 20.44pct compared with the same period last year. Due to the long settlement cycle and other industry characteristics, with the completion and settlement of the project at the end of the year, the payback of accounts receivable will greatly improve the operating cash flow, and the operating net cash flow will be reduced by 33.5076 million yuan.

Profit forecast and investment rating: the company's technology sector will achieve sustained and rapid growth by virtue of its solid technical advantages, controlling shareholder funds, government resources advantages and growing market demand, and the tourism business is operating steadily. The technology sector is gradually becoming the key investment direction of the controlling shareholders, and it is expected to achieve rapid growth by relying on the strong capital and resource strength of the controlling shareholders in the future. Through the "end + cloud" technology, innovative data-driven, from the traditional project product integration model (IT) to industry awareness services (OT), the net interest rate of technology business increased 1.14pct in the first half of this year, the company's 18-20 year EPS is expected to be 0.94 shock 1.15kg 1.38 yuan, respectively, August 9 closing price corresponding to PE is 19-16-13 times, maintaining the "prudent overweight" rating.

Risk hint: passenger flow growth / new routes / new business development is not as expected; Xinzhi recognizes that new orders are not as expected and transformation is not as expected.