Main points of investment:

The company released three quarterly results: in the first three quarters, the company achieved revenue of 473 million yuan, year-on-year + 51.24%, net profit of 118 million yuan, + 41.26%, net profit of 112 million yuan, + 43.06%; revenue of 166 million yuan, + 41.93%, net profit of 42.19 million yuan, + 26.51%, net profit of 42.11 million yuan, + 48.58%.

The growth rate of total compensation is stable at about 35%, and it is speculated that the "comparable gross profit margin" will remain stable. Through the consolidation of the cash flow statement and the balance sheet, the growth rate of 2018Q1/Q2/Q3 's total compensation in a single quarter was 34%, 28% and 41% respectively, with a cumulative year-on-year increase of 34% in the first three quarters of 2016 (37% in the first three quarters of 2017), and the company's salary growth remained at about 35% as usual. Reflected in the income statement, operating costs and R & D expenses increased by 34 million yuan / 37.47 million yuan respectively in the first three quarters compared with the same period last year; assuming that the per capita salary of implementation personnel and R & D personnel this year is 140000 yuan and 170000 yuan respectively, it can be estimated that the number of implementation and R & D personnel increased by about 81 and 73 respectively in the first three quarters. Benefiting from the change in fund valuation policy, the upgrade of new versions and the impact of container cloud business, Q1-3's revenue growth in a single quarter is more than 38%, which is higher than the growth rate of personnel costs. It can be inferred that its comparable gross profit margin remains stable.

80% of the accounts receivable come from the main business, and the operating cash flow Q4 of the parent company will improve. At the end of the third quarter, accounts receivable reached 568 million yuan, + 113% compared with the same period last year. Although accounts receivable increased greatly, 451 million yuan of it came from the business of the parent company (the remaining accounts receivable came from the commercial factoring business of Mutual Capital subsidiary), which matched the rapid growth of revenue. Among them, the customers of the parent company are all medium and large banks, insurance and fund companies, and the refund is guaranteed; while the commercial factoring business corresponding to the accounts receivable generated by the other subsidiaries also requires the company or its shareholders to provide guarantees during the expansion, they are all agricultural companies in good condition, so the overall risk of bad debts can be controlled. The net operating cash flow of the parent company in the first three quarters was-85.57 million yuan, compared with 4.06 million yuan in the same period last year. Although there was a large decline, the cash received from "selling goods and providing services" in the single quarter of Q4 accounted for about 54% of the whole year. And the increase in operating cash flow expenditure is mainly due to the increase in the number of employees recruited. It is expected that most of the accounts receivable of the Q4 parent company will have a higher positive probability of operating cash flow throughout the year.

The subsidiary of Mutual Capital is still expanding, but it has maintained a slight increase since the beginning of this year, with the company focusing more on traditional business and PaaS innovation business. Since the 2017Q4 subsidiary expanded its mutual fund business, accounts receivable generated by the Mutual subsidiary accounts for about 3.2%-3.8% of the total assets of the consolidated statements, corresponding to the business factoring business of earnings; other receivables generated by the subsidiary account for 12.22% of the total assets of the consolidated statements, up from 8.58% at the end of 2017, corresponding to Puyuan's purchasing business. The size of subsidiaries is controlled within a certain range. The company's medium-and long-term growth lies in the PaaS business. From the promotion of the head of strategic business to senior executives in the third quarter and the recruitment of company personnel, we can see that the company is more focused on strategic business and traditional business.

Maintain earnings forecasts and ratings: it is expected that the company's PaaS container cloud innovation business will become the main engine of performance growth, contributing 700 million in revenue in the next three years. It is estimated that the EPS will be 0.38 and 0.57 in 2018-2020, respectively, and the current share price will be 0.74 times that of PE in 32-21-16, maintaining a "buy" rating.