Event: the company released its three-quarter report for 2018, with revenue of 473 million yuan in the reporting period, an increase of 51.24% over the same period last year, a net profit of 118 million yuan, an increase of 41.26%, and a net profit of 112 million yuan after deducting non-recurring profits and losses, an increase of 43.06% over the same period last year.

The growth rate of performance is in line with expectations, and the new rules of asset management lead to the impact of investment adjustment. Under the role of increasing the marketing of the new generation of asset management system and asset trusteeship system, the company achieved sustained growth in the third quarter, with a net profit of 42.1912 million yuan in a single quarter, an increase of 26.51% over the same period last year, in line with the forecast growth forecast of 23.35%, 48.38%. The company's Q3 sales gross profit margin was 77.36%, showing a continuous downward trend since the end of last year, and the gross profit enhancement effect of new products began to weaken. In terms of expenses, the company's sales expenses and management expenses increased by 69.32% and 80.89% respectively in the first three quarters. The proportion of the company's R & D expenses to sales revenue remains at 35.36%. The announcement of the new rules on asset management in 2018 has a significant impact on the direction of the company's business development, the company has made great adjustments in sales and research and development, the cost growth rate is obvious, and the investment bias for the new rules also indirectly led to a decline in the growth rate of the main business.

The new rules of asset management and Shanghai Luntong are expected to become new growth opportunities for the company. With the announcement of the new rules and regulations on asset management in the middle of the year, the preliminary preparations for the new rules on asset management have entered the second half, and the company has timely adjusted the layout of its business this year, investing a large amount of research and development efforts in view of the new rules. It is expected to better respond to market demand when the new rules are landed on a large scale. On the other hand, the company reported that it covered more than 300 customers of financial institutions, while Shanghai Luntong is expected to open as early as December this year, when the relevant financial institutions will have a demand for updating the asset management valuation system, which will bring new growth space for the company's business.

Investment suggestion: the company's new generation asset management system platform and new generation asset trusteeship system continue to promote to promote the rapid growth of performance. At the same time, we will continue to accelerate the landing of new technology applications and accelerate the transformation and upgrading of our business model from a financial software provider to a financial service provider. From 2018 to 2019, the company's EPS is expected to be 0.38 yuan and 0.54 yuan respectively, maintaining the "buy-A" rating, with a six-month target price of 16 yuan.

Risk hint: innovation business is less than expected risk; Internet financial regulatory risk