Event: the company issued a forecast of results for the first three quarters of 2019 on October 14. The net profit for the first three quarters is expected to be 8605.00-93.8728 million yuan, an increase of 10%-20% over the same period last year. The net profit range for the third quarter is expected to be 4124.29-49.0657 million yuan, an increase of 3.46% for 23.08% over the same period last year. It is estimated that the non-recurrent profit and loss for the first three quarters will be about 14 million yuan. The impact of non-recurring gains and losses on net profit in the first three quarters of 2018 was 13.5223 million yuan.

Comments: 1. The performance is in line with expectations, and the telecommunications, financial and government business sectors have all maintained steady growth.

According to the company's performance forecast for the first three quarters of 2019, the company is expected to achieve a net profit range of 8605.00 to 93.8728 million yuan in the first three quarters of 2019, an increase of 10%, 20%, and a median of 89.9614 million yuan, an increase of 15.00% over the same period last year. In the third quarter, the net profit is expected to be between 4124.29 and 49.0657 million yuan, an increase of 3.46%, 23.08% over the same period last year, and the median is expected to be 45.1543 million yuan, an increase of 13.27% over the same period last year, and an increase of 41.36% over the previous quarter. In the first three quarters of 2019, telecom operators, finance, government and other business sectors have maintained steady growth, the company's market channel expansion has been strengthened, the efficiency of operation and management has been improved, and the annual performance is expected to remain stable.

2. 5G construction starts, BOSS upgrade is rigid, and investment in telecom support network is gradually picking up.

2019 is the first year of 5G. At present, the number of subscribers of 5G has exceeded 10 million. With the opening of network infrastructure, the investment in telecom support network for 5G will gradually pick up. In the 5G era, with the double growth of DOU and the innovation of business model, it is necessary to comprehensively upgrade the existing BOSS system. Tianyuan Dike is mainly engaged in B-domain business, in which the billing system and CRM system will change greatly. From the point of view of the billing model, the multi-dimensional billing model based on usage, connection, service, application content, delay level, speed level, customer level and network slice will be introduced, and the billing system needs to be customized and upgraded. In terms of computing power, the implementation of the Internet of things will bring more traffic, and telecom operators need software platforms with larger scale and more powerful computing power. Big data's analysis system needs to be continuously upgraded and expanded to meet the needs of high-performance massive data processing. From the perspective of customer relationship management, the target customer group in the 5G era has shifted from C to B, the richness of product types has been further improved, and great changes will take place in the existing customer relationship management, product configuration management, product marketing management and so on. Customer relationship management products need to be updated. At present, the company accounts for about 20% of China Telecom Corporation's market share in the BOSS field, has established deep cooperation with China Unicom, and has cut into China Mobile Limited's market through big data's business, and the company's market share in the three major operators continues to increase.

The competition pattern of BOSS industry has been initially established, and cloud computing is expected to become the catalyst for the change of industry pattern. Tianyuan Dike was one of the first manufacturers to cloud the BOSS system for China Unicom. In 2016, together with BABA, he won China Unicom's first card centralized cloud project and got the first opportunity to cloud the BOSS system. In addition, the company in China Telecom Corporation has undertaken Anhui Telecom BSS3.0 cloud, Shaanxi Telecom CRM cloud, Shanghai Telecom OCS cloud and other major projects. In the future, the company is expected to take advantage of the first-mover advantage and leading experience of BOSS system cloud to achieve corner overtaking.

3. The demand for bank credit management is growing rapidly, and the investment in the construction of the core system has declined. The financial sector of the company is mainly dominated by Deco and Wienbert. In the first three quarters of 2019, under the background of the total household credit continues to rise and the demand for bank credit management is strong, Deco's performance shows a rapid growth trend, which is expected to be maintained throughout the year. Wiembert mainly provides bank core system consulting, development and IT services to large banks. under the background of downward pressure on the overall economy, banks have strengthened cost control, the scale of investment has declined, and the current cloud demand for core systems has not yet formed a scale. On the whole, the overall financial sector of the company is expected to remain stable, and the credit management platform and the new marketing system are expected to become the main driving force to increase the income of the sector.

4. Rapid breakthroughs in the public security market, product components help companies to achieve business sinking under the background of the information age, the value of big data gradually appears, and the establishment of public security data systems connected by different types of police is the primary task of public security information reform. The company deeply ploughs the field of public security information construction, and has landed projects in developed cities and cities such as the Pearl River Delta, Yangtze River Delta and Central China. After modularizing and slicing the public security products, the company successfully sank to the public security business needs of third-tier cities and district and county cities. In the first three quarters of this year, the company made rapid breakthroughs in the public security market, successfully expanding new markets such as Foshan, Zhanjiang, Chongqing, Ezhou, Jurong, Suqian, Shaoyang, Linwei and Chifeng, and the contract value of the public security industry increased significantly compared with the same period last year.

5. 5G+IT cloud opens the future growth space of the company, and maintaining the "highly recommended-A" rating 5G+IT cloud is the two main growth drivers of the company in the future. The burst of traffic in the 5G era and the comprehensive innovation of application scenarios have brought about the demand for iterative upgrade of telecom software systems. The company has been engaged in the BOSS field of the three major operators for many years, occupies a high share in the field of operators, and maintains close cooperation with BABA, Tencent, Huawei and other manufacturers to continuously expand its business capabilities in big data and cloud computing. The company deeply serves the customers of the government (public security) and financial industry, and expands to multi-industries, and has accumulated a wealth of industry application scenario support capabilities. The demand for cloud computing warms up in the second half of the year, and the IT cloud trend in the industry is expected to bring growth opportunities for the company. 5G + cloud computing two-wheel drive, optimistic about the company's long-term growth in the 5G period. The company's net profit from 2019 to 2021 is expected to be 278 million yuan, 367 million yuan and 491 million yuan respectively, corresponding to EPS 0.44 yuan, 0.58,0.77 yuan respectively, corresponding to PE 19.8,15.0,11.2 times, maintaining the "highly recommended-A" rating.

Risk tips: operators' capital expenditure falls short of expectations, market expansion falls short of expectations, and industry investment declines.