Performance is growing rapidly, with 18H1 orders up 83 per cent year-on-year. From 2013 to 2017, the company's operating income grew at a compound annual growth rate of 26%, and its net profit returned to its mother grew at an annual compound rate of 40%. After deducting the annual compound growth rate of 41% for non-return net profit, the company's performance grew rapidly. The company's 18H1 realized revenue of 1.043 billion yuan, down 9.71% from the same period last year, and its net profit was 97 million yuan, down 6.66% from the same period last year, with a slight decline in performance. However, the amount of 18H1 orders (signing contracts and winning bids to be signed) increased by 83% compared with the same period last year, and orders increased rapidly, laying a solid foundation for the gradual recovery of the company's performance.
The main business is concentrated with strong profitability. The company's business is mainly concentrated in the three major areas of smart medicine, smart building and intelligent transportation, and the revenue of the three major businesses accounts for more than 95%. Judging from the company's existing business layout and future strategic planning, we believe that smart medical business is expected to become the company's main source of revenue and profit in the future. From 2013 to 2017, the company's net interest rate remained between 9-13%, of which from 2015 to 2017, the net interest rate increased year by year. The company's profitability is gradually increasing.
Smart medicine opens up room for future growth. In 2015, the company made its second strategic transformation, focusing on expanding its smart health care business. In the first half of 2018, the order volume of smart medical business increased by 98.48% compared with the same period last year, and the business is progressing smoothly. (1) the field of intelligent hospital. The company acquired Jiuxin Medical in 2015 and laid out the business of Wisdom Hospital. Jiuxin Medical has built high-standard purification operating rooms and ICU wards for more than 200 third-level first-class hospitals, including Peking Union Medical College Hospital, PLA 301Hospital, former Ministry of Health Beijing Hospital, Beijing Tiantan Hospital, Zhongshan Hospital affiliated to Fudan University in Shanghai, and Shanghai Huashan Hospital. In January 2016, the company signed an agreement with the Information work Office of Huainan Municipal people's Government on the PPP project for the construction of people's livelihood in Huainan Smart City, with a total government payment of 239 million yuan. At present, the company's Huainan Regional Medical big data platform has entered its third year of implementation. Huainan project is based on the data platform, combined with prescription transfer and third-party services for business model innovation, Huainan Smart Medical PPP project has successfully passed the 2017 government performance evaluation and is progressing smoothly. In 2016, the company established a "smart health" industry fund with Shenzhen Jiafucheng Equity Investment Fund Management Co., Ltd., and reached a strategic cooperation with Medical 160 in the field of Internet health care. Medical treatment has been connected to more than 3000 large hospitals across the country, covering more than 200 cities, and the number of real-name registered users has exceeded 100 million. We believe that the company and medical treatment 160 complement each other, and the two sides jointly build a "user-centered" city-level health service ecosystem, which can be developed in the future.
Profit forecast and investment advice. We believe that the compound annual growth rate of the company's homed net profit in the past five years is as high as 40%, and the performance is growing rapidly. The order volume of 18H1 smart medical business increased by 98% compared with the same period last year, and smart hospitals, regional medical care, big data, Internet health care and other fine molecular areas are developing rapidly. We estimate that from 2018 to 2020, the return net profit of the company will be 345 million yuan / 469 million yuan / 619 million yuan respectively, and the EPS will be 0.18 yuan / 0.25 yuan / 0.33 yuan respectively. At present, the corresponding PE of the stock price is 21 times, 16 times and 12 times respectively. Maintain a "buy" rating.
Risk hint. The progress of smart medical projects is slow; the development of smart buildings and smart transportation business is not as expected.
