Event
Tianhai Investment released its annual report in 2016, with an annual income of 37.56 billion, an increase of 5115.5% over the same period last year, and a net profit of 322 million, an increase of 30.3% and 0.11 yuan over the same period last year.
The acquisition of Ingram smoothly delivered, the revenue volume grew rapidly, and the performance was in line with expectations. In December 2016, the company promoted the transformation and upgrading of the business. Ingram International, the leader of the US IT supply chain acquired in the form of cash payment, officially completed the delivery. Ingram's business is huge, with 2015 revenue equivalent to 279.4 billion yuan, so even if it took less than a month to put together, the company's revenue has grown significantly. In terms of main business profit, Ingram contributed net profit of 380 million yuan; in terms of non-recurrent profit and loss, the exchange gain of 181 million yuan in 2016 and a 106 million return on the purchase of wealth management products thickened the company's performance. however, the acquisition of Ingram generated 150 million yuan in intermediary fees to raise costs, the overall performance of the company is basically in line with expectations.
The future income level of the company may exceed 300 billion, and the performance is flexible.
Looking ahead, it is expected that the company's revenue volume will further rise to 300 billion yuan in 2017, and Ingram's revenue will also become the dominant variable of the company's profits. The global IT industry has entered a mature stage. According to international data (IDC), the average annual growth rate of global IT expenditure from 2016 to 2019 is 2.91%. The growth rates of IT software expenditure and service expenditure are 6.7% and 3.1% respectively, which is not high. As a leading enterprise, Ingram will rely on its scale advantages and highly professional products and services to ensure and open up market space. We believe that the focus of the company is that it has a revenue volume of 300 billion yuan, but the level of profit margin is relatively low, but it also means that the performance is more flexible. according to estimates, if the gross profit margin of Yingmai's IT supply chain business increases by 0.1%, the company's homing net profit will increase by 12.1%.
Define the future strategy and focus on the long-term layout
The company will continue to find and expand new areas of science and technology business through joint ventures and cooperation, investment mergers and acquisitions, and carry out investment business in line with the development direction of science and technology industry, so as to provide channels for technology development and global business development of science and technology enterprises. While defining its future development strategy and business plan, the company signed a framework agreement with Beijing Xinlongmai to launch an investment M & A fund, which may be laid out actively around high-quality enterprises such as IT services and modern logistics in the future, with a view to achieving long-term rich returns and good synergy with stock business to create greater value in the future.
Investment suggestion
We expect the company's income to grow by 716.4% and 6.1% from 2017 to 2018, with a net profit of 1.286 billion and 1.387 billion, with a growth rate of 299.9% and 7.9%. The company maintains its "buy" rating and downgrades its target price to 9.5 yuan, corresponding to 2017-2018 PE21.4 times and 19.9 times.
Risk hint: the global economy is declining, and Ingram's business is not as good as expected.
