Net profit in 2017 increased by 175% year-on-year, in line with expectations
Kangqi shares released its annual report for 2017: revenue was 1.987 billion yuan, up 98.5% over the same period last year; net profit was 299 million yuan, an increase of 175.1% over the same period last year, corresponding to earnings per share of 0.57 yuan, which was in line with our expectations. On a quarter-to-quarter basis, Q1/Q2/Q3/Q4 revenue increased 124%, 136%, 171%, 42%, and net profit increased 504%, 203%, 381%, 71%, respectively.
The company plans to distribute 0.57 yuan in cash for every 10 shares and increase 3 shares.
Trend of development
1. The substantial increase in performance is mainly due to the acquisition and contribution of the target, while the performance of traditional lenses is robust.
Operating income: ① big data Financial Business: revenue from telemarketing business was 1.144 billion yuan, an increase of 318% over the same period last year. The rapid growth rate is mainly due to the smart calculation of 2017 and the full-year income, only in the fourth quarter of 2016. In addition, the company acquired public data in 2017, and the air travel data business contributed 20.45 million yuan in revenue; ② resin lens business: based on product research and development and increased marketing, the business maintained a steady growth trend, with revenue of 796 million yuan in 2017, an increase of 13.7% over the same period last year.
Profitability: the flagship smart consolidated table drives the gross profit margin in 2017 to increase 10.2ppt compared with the same period last year, and the expense rate increases 6.2ppt over the same period last year, including sales / management / financial expense rate + 5.8/+0.6/-0.1ppt, respectively. Overall, net interest rates rose 4.2ppt in 2017 compared with the same period last year.
2. Pay attention to the completion of Flag Intelligent performance commitment in the short term. In 2017, the smart deduction of non-net profit was 224 million yuan, which failed to realize the 2017 performance promise (245 million yuan).
Since the beginning of this year, the company has greatly increased its investment in talents and equipment, and its short-term performance is expected to remain under pressure (forecast that 18Q1 net profit will decline by 54% to 63% compared with the same period last year). Follow-up, we need to pay attention to the completion of Flag Intelligence's 2018 performance commitment (deducting non-net profit of not less than 345 million yuan).
3. "big data Financial Technology + Resin Lens" two-wheel drive opens the space for medium-and long-term growth.
The dual-main business strategy will help the company to disperse business risks and explore new profit growth points, and the possibility of continued extension integration will not be ruled out in the future.
Profit forecast
In view of the pressure on the short-term performance of Flag Smart, we lowered our earnings per share forecast for 2018 by 8.7% to 0.68 yuan, introducing EPS 0.85 yuan in 2019.
Valuation and suggestion
The company's current share price maintains the recommended rating for 18gamma, 19x23, 19xpxE, but due to the earnings forecast downgrade, we lowered our target price by 17% from 23 yuan to 19.12 yuan, and compared with the current share price, we lowered our target price by 17% to 19.12 yuan, and compared with the current stock price, there is 22 times 18gamma, which has 20% room.
Risk
Flag intelligence performance is lower than expected; exchange loss; international market risk.
