The company's 1q3Q net profit decreased 55% to 13.38 million yuan compared with the same period last year, in line with the expected results for the first three quarters of 2016: operating income was 532 million yuan, up 4.50% from the same period last year; net profit belonging to the parent company was 13.378 million yuan, down 55.16% from the same period last year, corresponding to 0.02 yuan per share.

Trend of development

The company accelerates the market expansion, strengthens the technical ability, and the cloud parking project has made great progress.

(1) in terms of the market, the company signed various sales contracts of 744 million yuan in the first three quarters, an increase of 12.34% over the same period last year; among them, the cloud parking project signed a total of 3129 parking lots (including 2773 advertising gate parking lots). A total of 5817 sets of parking equipment are involved (including 5073.5 sets of advertising gate equipment). By the end of the reporting period, the company has carried out trial operation of road gates in some areas of Guangzhou and Dongguan. (2) in terms of technology, the company upgraded and optimized the hardware and software equipment, intercom products, discount chain and other products of the cloud parking lot, its APP reservation and parking space sharing function was activated, and a pilot reservation sharing parking space was carried out with some parking lots in Guangzhou.

Profit forecast

We keep our full-year earnings per share forecast for 2016 and 2017 unchanged.

Valuation and suggestion

Currently, the company's share price corresponds to the 2016 EPS 2017e 155.5x/138.0x. We maintain the recommended rating and the target price of RMB 16.00.

Risk.

(1) there is a significant decrease in housing completion or new construction; (2) the company's transformation to the Internet and the market expansion of cloud parking are not as expected; (3) the sector's systematic valuation pullback.