Events:
On August 25, 2016, the company issued a preliminary plan for the non-public offering of A-shares. The company intends to raise no more than RMB 545.572 million in non-public offering shares to be used for "Research and Development Project of Security access solution based on NB-IoT Technology", "Construction and Operation Project of Medical Insurance Fund consumption Terminal Security Management platform", "production Intelligent Transformation and upgrading Project" and supplementary liquidity. The issuing price of the shares shall not be less than 14.07 yuan per share.
Main points:
1. The company will be the first to benefit from the accelerated development of the Internet of things through SIM cards and chip modules.
In 2016, the development of the Internet of things accelerated significantly. With the adoption of the NB-IoT technology standard by 3GPP, because of its four advantages of "wide coverage, low cost, low power consumption and massive connection", it brings new opportunities for the development of the Internet of things based on cellular connection.
We estimate that by 2020, 500 million new devices of the Internet of things based on cellular connection will be added in China, which means that at least 500 million SIM cards will be added. As the leading SIM card manufacturer in China, the company will benefit from the development trend of cellular Internet of things. The company intends to invest 42.1 million yuan (including 17.5 million yuan to be invested) in the R & D project of secure access solution based on NB-IoT technology, and intends to take eSIM as the starting point to develop secure access and management solution based on NB-IoT technology, so as to make a good technical reserve for the operation of the company's information security management program. The company will also research and develop eSIM integrated NB-IoT communication chip modules through independent research and development and cooperation with NB-IoT module enterprises.
We believe that the development of the Internet of things has entered the fast lane, NB-IoT development prospects are even broader, the industry chain communication chip module, SIM card as the upstream will be the first to benefit. Through this fixed increase and project investment, the company will help the company to quickly enter the Internet of things market, gain a larger market share, and inject a boost into the company's performance growth.
2. Popularize the "Medical Insurance Fund consumption Terminal Security Management platform" and broaden the source of income.
Social Security PSAM Card (Purchase Secure Access Module) makes cross-district payment, multi-application expansion and so on possible. At present, the scope of use of the card is still expanding. Therefore, the positioning management of social security PSAM card terminals has become an important link in the supervision of designated medical institutions and NCMS designated medical institutions that identify the consumption of medical insurance funds.
In order to respond to the regulatory needs of health insurance regulators for social security PSAM cards, the company independently developed a medical insurance fund consumer terminal security management platform with indoor positioning technology as the core (hereinafter referred to as "MPSP platform"). The MPSP platform is composed of business front equipment installed in designated retail drugstores, designated medical institutions (collectively referred to as "two fixed institutions") and NCMS designated medical institutions, and a safety management system set up in prefectural and municipal management institutions. The platform effectively meets the needs of social security PSAM card positioning management, and improves the management efficiency of regulatory departments through trusted data collection, return and analysis and processing. Effectively reduce the operating costs of the two institutions.
At present, the platform has been successfully piloted and recognized by customers. The company intends to invest 419 million yuan (of which 378 million yuan will be invested) in the construction and operation of the health insurance fund consumer terminal security management platform, plans to promote the construction and operation of MPSP platform in more than 80 prefecture-level cities across the country, build and install 160000 front equipment of MPSP platform and 80 background security management systems, and start the operation of MPSP platform in an all-round way.
We believe that the company is one of the major producers of social security cards and PSAM cards, providing more than 150 million social security cards to 24 provinces and cities by the end of 2015. The company has a better understanding of the security requirements of the health insurance fund consumer card environment, and has made full use of its accumulated research and development technology in smart cards, national secret algorithms, etc., to develop and complete the MPSP platform, which has obvious first-mover advantages, and the platform is expected to become a new revenue growth point for the company.
Conclusion:
Considering the obvious acceleration of the development of the Internet of things, NB-IoT accelerates the development of the cellular Internet of things. We estimate that the company's EPS from 2016 to 2018 will be 0.22,0.28 and 0.37 yuan respectively, corresponding to 69 times, 54 times and 41 times of PE, respectively.
Risk tips: the development of the Internet of things is not as expected; industry competition intensifies; fixed growth fails.
