Event description:

1. The company released the 2018 mid-term report, the revenue performance was good, the loss decreased year on year, the company realized revenue of 994 million yuan in the first half of the year, an increase of 25.29% over the same period last year; the net profit was-41.9638 million yuan, and the loss decreased by 27.11% compared with the same period last year.

Event point of view:

1. The company's revenue growth is in line with expectations, and the mismatch between revenue and expenses leads to semi-annual reported losses.

In the first half of 2018, the company's operating income was nearly 1 billion yuan, an increase of about 25% over the same period last year, and revenue growth was in line with expectations. The company's net loss for the current period is 41.96 million yuan, mainly due to the industry the company is in and the characteristics of its customers. The main customer of the company is the bank group, the purchase payment is concentrated in the fourth quarter, while the expense is more balanced among the quarters, and the matching of income and expense is not synchronized. The main reason for the decrease in the loss for the current period compared with the same period last year is that the company's revenue growth in the first half of 2018 was better than that in the same period in 2017.

2. Dig deep into the technology and financial needs of banks, while expanding into other non-financial digital fields.

At present, while ploughing the banking industry, the company also makes great efforts to expand customers in insurance, securities, government affairs, education, transportation and other industries. During the reporting period, it successfully expanded a number of financial customers, such as China Life Insurance Company Limited, PICC, and Jianxin property Insurance, and reached a strategic cooperation with NetInfo to help the digital transformation of the retail business of commercial banks. During the reporting period, the company also developed CNAC net letter and other non-financial clients; entered the field of "Internet + party building" through the acquisition of Honglingyun, a new third board company; and fully participated in the "thinning" project of the Education Department of Yunnan Province. to carry out cloud marking and data analysis business in 51 schools in Kunming.

3. The successful implementation of the first independent and controllable case of the banking industry is expected to benefit from the domestic alternative policy.

At present, the company has the largest complete independent and controllable implementation case in the domestic banking industry. Nantian Information is the logical centralization project of the savings system implemented by the Postal savings Bank of China, which is the first successful attempt by the domestic banking community to deploy a large-scale high-capacity core system on the open platform. With the in-depth promotion of self-controllable policy, the company is expected to gain more market share in the future tide of banking self-controllability and domestic substitution. At the same time, the company also joined hands with Tide Information to jointly develop a series of comprehensive system solutions based on independent innovation platform for the banking industry, which further enhanced the company's market competitiveness in the field of independent control.

4. transfer the equity of the pharmaceutical industry and refocus on the development of the main industry.

The company sold 41.36% of its shares in Yunnan Pharmaceutical Industry in the first half of 2018 and received a full transfer of 337 million yuan on July 20. This will help the company to withdraw funds, rationally allocate the company's resources and focus on the development of the main business. At the same time, affected by this, the company is expected to achieve a year-on-year profit of 10-21 million yuan from January to September.

5. Investment suggestions

Considering the company's self-controllable first-mover advantage in finance, the company is expected to achieve a net profit of 0.35,0.49 and 60 million yuan from 2018 to 2020, corresponding to 71 times, 51 times and 42 times of PE, with a "recommended" rating.

Risk hint: the company's strategic transformation is not as expected and policy promotion is not as expected.