Event: the company released its annual report for 2018, with revenue of 639 million yuan during the reporting period, an increase of 19.01% over the same period last year, a net profit of 178 million yuan, a decrease of 14.72% over the same period last year, and a net profit of 156 million yuan after deducting non-recurring profits and losses, a decrease of 21.05% over the same period last year. The company pays a cash dividend of 1 yuan (including tax) for every 10 shares to all shareholders. The company also released its quarterly report for 2019, with revenue of 153 million yuan during the reporting period, an increase of 6.37% over the same period last year, a net profit of 26 million yuan, an increase of 3.16% over the same period last year, and a net profit of 22 million yuan after deducting non-recurring profits and losses, a decrease of 11.92% over the same period last year.
The main business advanced in an orderly manner, while the subsidiary business declined: during the reporting period, the company's revenue from customized software development and sales and service fees reached 399 million yuan and 192 million yuan, respectively, an increase of 28.61 percent and 8.32 percent over the same period last year. In 2018, the company made great efforts to develop product innovation and launched 52 software products, such as win-win occupational pension financial valuation software V4.5, win-win basic old-age insurance fund financial valuation software V4.5 and so on. In addition, the supply chain business income decreased by 8.48%, mainly due to the significant decline in the operating performance of the subsidiary Shanghai win Financial Services Co., Ltd., affected by the macroeconomic environment. During the reporting period, the company's management expenses were 82.6878 million yuan, an increase of 60.11% over the same period last year, mainly due to the increase in related costs caused by the increase in business scale and the increase in staff. In addition, the company's R & D expenses totaled 230 million yuan in 2018, an increase of 19.66% compared with 2017. The company continued to increase its R & D and obtained 52 software copyrights during the reporting period.
The two policies are in parallel, which is good for the company's business development: the new regulations on asset management in 2019 are expected to achieve large-scale landing. So far, five major financial subsidiaries, including China Construction Bank Corporation, Bank of China Ltd., Agricultural Bank Of China, Bank of Communications and Industrial and Commercial Bank of China, have been approved one after another. At present, the company has launched the bank financial management "new rules" solution, and won the bid for the business system construction of a number of bank financial subsidiaries, which will be the main driving factor for the company to achieve sustained performance expansion in the next two years.
In early February 2019, the regulatory authorities issued a notice on matters related to the conversion of the securities trading mode of the newly established public fund managers, and the work related to the transformation of the securities trading mode of the newly established public fund managers has been transferred from the pilot to the routine. The transformation of this model will help to bring the volume of securities business to the company.
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. It is estimated that the company's EPS from 2019 to 2020 will be 0.31 yuan and 0.36 yuan respectively, maintaining the "buy-A" rating, with a six-month target price of 17 yuan.