Main points of investment:
In the first three quarters of 2017, the company's revenue increased by 58.72% year-on-year, and its net profit increased by 17.93% compared with the same period last year. In the first three quarters of 2017, the company achieved an operating income of 1.647 billion yuan, an increase of 58.72% over the same period last year, and a net profit of 199 million yuan, an increase of 17.93% over the same period last year. The revenue growth is mainly due to Guanzhi & Huaxiao's combined factors and the growth of revenue scale from May to June last year, and the smooth development of Yongqian mechanical and electrical customized integrated system service business.
The integrated system business affects gross profit margin & the increase in the rate of management expenses causes the growth of net profit to be lower than that of revenue. In the first three quarters of 2017, the company's sales gross profit margin was 34.85%, down 4.4 pct from the same period last year, mainly due to the better business development and increased share of the integrated system with slightly lower mechanical and electrical profit margin in Yongqian. During the period, the expense rate was 21.54%, an increase of 1.04 pct over the same period last year, of which the management expense rate was 14.14% pct 0.37pct; the sales expense rate was 7.44% Universe 0.43pct; and the financial expense rate was-0.04%/+0.24pct.
The company plans to acquire 100% stake in Yingnai and 43% stake in Shanghai Qiancheng. The company plans to acquire 100% equity interest in IoT and 43% equity in Shanghai Qiancheng, and raise 400 million yuan and 200 million yuan from JD.com Jinquan and Hongzhao investment respectively to pay for the cash consideration of this transaction, the new electronic label development and industrialization project, the Internet of things big data operation platform construction project, the large-scale unmanned shopping center intelligent equipment and system development and industrialization project, the domestic marketing network construction project and so on.
Acquire and build a perfect layout of intelligent logistics system. After the acquisition of IWU, the company has improved the layout of the picking field in the intelligent logistics system, and now has an all-round intelligent logistics system storage system, transportation system, picking system, palletizing system, warehouse management and control system. Can be customized for customers to create intelligent warehousing and logistics system, greatly enhance competitiveness. In terms of subdivision, the storage system: HKUST Intelligence, etc.; Transportation system: Huaxiao Precision, etc.; picking system: Yingli things Union; palletizing system: Yongqian Mechatronics, etc.; Warehouse Management Control system: HKUST Intelligent Logistics, etc.
The introduction of strategic investors such as JD.com Jinquan brings opportunities for the development of intelligent logistics system. The introduction of JD.com Jinquan is of great significance to the development of intelligent logistics system by HKUST: 1) at present, HKUST already has the ability to build intelligent logistics system in all aspects. It can provide integrated solutions of intelligent logistics and warehousing for strategic investors such as JD.com Jinquan. We expect that JD.com Jinquan will also greatly promote the landing of intelligent logistics solutions of HKUST. 2) IoT has strong industry experience and technical precipitation in the field of Internet of things, which can provide strategic investors such as JD.com Jinquan with large-scale RFID electronic label products, intelligent new retail system development and Internet of things big data management services.
Profit forecast and investment advice. Excluding the acquisition of WUMC and Shanghai Qiancheng, the estimated 17-19 net profit is 3.51,4.40 and 531 million yuan, an increase of 26.67%, 25.49% and 20.66% respectively over the same period last year. After the completion of the acquisition, the net return profit from 2018 to 2019 is expected to reach 518 million yuan and 628 million yuan respectively (assuming that the whole year of 18-19 is consolidated and not considered for 17 years), corresponding to earnings per share (assuming that the matching financing share price is calculated according to today's closing price). At present, the acquisition growth is advancing in an orderly manner. Considering that intelligent manufacturing is a key industry encouraged by the state, and the overall valuation of the industry is relatively high, it will be valued 50 times after completion in 2018, corresponding to a price of 32.5 yuan per share.
Risk factors. The risk that the acquisition can not be completed successfully, and the risk that the industrial consolidation is not as expected.