Event

According to the company announcement, the major shareholder signed the "Equity transfer intention Agreement" with the State-owned Capital Operation and Management Center of Haidian District, Beijing, which intends to acquire 5% of the 20% stake in the listed company held by the major shareholder in cash. The major shareholder intends to transfer no more than 149 million shares.

Brief comment

This time, the major shareholders transferred some of their shares. There are two main effects: 1) to solve the problem of high pledge rate of major shareholders. Major shareholders hold 38.82% of the shares listed, the current pledged shares are 91%, and the remaining 9% are frozen. The equity transfer of major shareholders will effectively alleviate the risk of excessive pledge rate. 2) the introduction of Haidian District State-owned Capital Management Center as a strategic investor may become the actual controller of the company, which will help to bring business and capital resources to the company, and is expected to alleviate the financial pressure caused by business expansion of listed companies. it has a long-term positive impact on the future operation of the company.

The military ad hoc network business has accumulated 6 billion yuan of orders, bringing short-term performance increments, of which nearly 570 million have been recognized in 2018, and the rest is expected to be confirmed step by step in 2017-2019. In addition, we expect the company to have orders landing in 2019, which is expected to directly drive the company's performance growth.

The layout of the company can be matched with the overseas giant Trimble. With positioning technology as the core, the company has the R & D production capacity of the whole industry chain from chips, antennas, boards and terminals. Based on this, the company continues to develop downstream vertical industry applications, and the surveying and mapping business is growing at a high speed. Precision agriculture, machinery control gradually break through the front equipment, on the eve of explosive growth, public security business cultivation is mature, is expected to increase the quantity, the business development situation is good, and the sustainable development potential is sufficient. We expect the company's net profit from 2018 to 2019 to be 360 million and 500 million respectively, corresponding to PE 21X and 17X.

Risk tips: the promotion process of equity transfer is not up to expectations; the application of the industry is not up to expectations.