Event

The company released the 2019 mid-term report, during the reporting period, the company achieved operating income of 1.593 billion yuan, an increase of 34.69% over the same period last year, and a net profit of 44.8071 million yuan, an increase of 16.8% over the same period last year.

Our comments are as follows:

Operators consolidate the dominant position of Unicom, telecom and mobile business areas continue to make breakthroughs, focus on technical research and development and technical standard formulation for 5G application scenarios, and are expected to usher in new opportunities brought by the upgrade of 5G support system.

The company is one of the leading BOSS system leaders in China, maintaining an absolute advantage in the Unicom Group concentration and Yunhua market, adding four provincial companies BSS3.0 market share in China Telecom, and nearly 20% market share in China Telecom BSS and big data business. A breakthrough has been gradually formed in China Mobile BSS and big data market, promoting the steady growth of operator business. As 5G enters the first year of construction, in addition to the upgrading of traditional BOSS systems, more BOSS cloud, edge sinking and intelligent changes will occur in 2B-oriented industry applications, industrial Internet and other fields. The company focuses on 5G R & D and the formulation of related technical standards, and the 5G era is expected to usher in new opportunities for development.

The public security business will strengthen its productization and fragmentation, adapt to the new situation of big data's business at the prefectural and municipal level under the changing macroeconomic environment, realize the expansion of new projects in many prefectures and cities, and the contract volume has increased substantially compared with the same period last year. Due to the characteristics of public security business, the settlement is mainly reflected in the second half of the year, and the rapid landing of new projects lays a solid foundation for the rapid development of public security business throughout the year.

The company deeply ploughs the core city benchmarking project in the field of public security big data, and the demonstration effect is remarkable. At the same time, the company should cope with the changes in macro-economy and government expenditure, strengthen the productivization and slicing of Public Security big data, give full play to the advantages of regional teams, speed up the landing of public security projects at the prefectural and municipal level, and successfully expand Foshan, Chongqing and other new markets, with a substantial increase in contract value compared with the same period last year. As the settlement cycle of public security projects is mainly in the second half of the year, the income in the first half of the year is relatively low, and the slight decline in income compared with the same period last year does not change the upward trend of the whole year.

New business in the financial industry continues to land, and the technology accumulation of the company big data and cloud computing for many years is deeply consistent with the needs of customers in the financial industry, and is expected to continue to expand in the areas of big data risk control, intelligent customer acquisition and business management, and is expected to achieve sustained and rapid growth.

The Weinbert acquired by the company has been deeply cultivated in the core system of large banks for many years, and the subsidiary Dike Digital Gold cultivated by the company continues to apply big data, cloud computing and other technologies to the financial field. in financial customer risk control, marketing and other areas to launch intelligent customer acquisition, credit management, risk control and other areas continue to launch new products, the product landed smoothly, promoting the sustained and rapid growth of the business of the financial industry. In the current environment of rising credit leverage, the demand for bank credit risk control continues to be strong, and the corporate financial business is expected to continue to grow rapidly.

Reiterate the core growth logic of the company:

The company has a comprehensive layout in telecommunications, public security, finance and other fields, focusing on big data, cloud computing, artificial intelligence and other core technologies to promote the sustained and rapid landing of industry applications. Telecom companies as domestic veteran BOSS system leaders, market share continues to increase, 5G era is expected to usher in new growth opportunities. The demonstration effect of public security companies in benchmarking projects in key cities is outstanding, products and market strategies are actively optimized, public security big data contracts continue to grow rapidly, and public security business is expected to continue to grow. Companies in the financial sector have fully coordinated channels and technology to connect big data, artificial intelligence and other technologies to the needs of financial customers, and new products will continue to hit the ground, which is expected to promote the sustained growth of financial business. Several major business lines of the company go hand in hand and are expected to maintain long-term and rapid growth.

Investment advice and profit forecasts:

Telecom + government + financial layout is perfect, all business lines go hand in hand, and the company's revenue and profits are expected to continue to grow rapidly. Due to fluctuations in macro factors at home and abroad, the company's net profit in 1921 was slightly adjusted from 2.86,3.73,477 million yuan to 2.70,3.66 and 481 million yuan, corresponding to the 19-year price-to-earnings ratio of 19 times, reiterating the "buy" rating.

Risk hints: low expectation of revenue recognition progress, risk of technological research and development, risk of macroeconomic fluctuation