Event

The company today disclosed its semi-annual report for 2017. during the reporting period, its operating income reached 598.6245 million yuan, an increase of 37.99 percent over the same period last year, while the net profit belonging to shareholders of listed companies was 50.1395 million yuan, up 217.39 percent from the same period last year. From January to September 2017, the net profit attributable to shareholders of listed companies is expected to be 135 million yuan to 170 million yuan, an increase of 77.11% over the same period last year to 123.03%.

Steady development of e-government, continuous focus of group management and control

During the reporting period, the company's e-government business grew steadily, and revenue increased by 15.86%. Projects in the field of finance and taxation are progressing well. In the field of transportation, tens of millions of projects have been signed, such as the Ministry of Transport, the Civil Aviation Administration and so on. In the judicial field, we have further strengthened the promotion and application of intelligent courts throughout the country, completed the upgrading and transformation of the financial statistics system of the Supreme Court, and signed new projects in Hubei and Hainan. In terms of group management and control, we continue to polish the solution system with shared services as the core, and strengthen the market expansion of key industries. Zijin Mining Group, China Railway Construction and other projects have been put into practice. However, due to factors such as the start-up of some projects or the lag in acceptance, it is confirmed that revenue has dropped by 16.18% compared with the same period last year, and it is expected that the implementation of the project will be accelerated in the second half of the year.

Establish a digital communication group, integrate and transform into a new chapter

The company has established its digital communication group for a long time, with an operating income of 338 million, an increase of 69.92% over the same period last year, benefiting from the 27.7165 million yuan transferred to the Q2 table in Shanghai, and the total net profit of the subsidiary is 64.14 million yuan. In the face of policy risks in the overseas advertising market, Yiqi Lian timely scaled back its business scale, strictly controlled expenses and costs, and achieved a 387% increase in net profit in the face of declining revenue. PandaMobo began to actively promote the transformation of business strategy, vigorously develop government and enterprise business based on big data products, and pay close attention to the "Belt and Road Initiative" policy. Ruiyi Hengdong continues to expand the platform-wide marketing strategy, paying close attention to 4A and a number of domestic and foreign well-known brands, achieving a net profit of 8.01 million yuan and significantly expanding the scale of self-media delivery business.

Focusing on the areas of transportation, finance and taxation, and people's livelihood, big data's application gradually landed.

Based on customer demands, the company focuses on big data industry solutions in the areas of transportation, finance and taxation, and people's livelihood: in the field of transportation, big data analysis models are established, such as urban population distribution, travel demand, temporal and spatial characteristics of passenger flow, emergency traffic flow forecast, traffic operation evaluation, bus route simulation and optimization, etc. In the field of finance and taxation, the big data analysis model of financial budget and final accounts and big data analysis model of assets are established; in the field of people's livelihood, various models and portraits of accurate poverty alleviation orientation are established, which significantly enhance the value of the company's solutions and projects to customers. The application of each plate has made good progress.

Investment suggestion

The company's investment in technology and solutions in the past few years is gradually entering the harvest period, combined with the strong rise of its digital communication, it is optimistic that the business will enter a rising period. The net profit for 2019 is expected to be 3.29 million for 2019. Considering that the consolidated statement is only 9 months old and the diluted EPS is transferred, the target price will be lowered to 14.1 yuan, maintaining the "overweight" rating.

Risk hint: the coordination of epitaxial expansion is not as expected.