Main points of investment
Events: on June 26, Premier Li Keqiang inspected Zhuolang Technology, which is 39% owned by Tianjin Songjiang, while attending the Summer Davos Forum in Tianjin. Zhuolang Science and Technology has also become one of the three Tianjin enterprises inspected by the premier this time.
Li Keqiang expressed the hope that Zhuolang Technology will create space for more enterprises, collectors and developers, make a bigger market, and serve more enterprises, and that Zhuolang Technology can grow from a small giant to a big giant.
Comments:
Zhuolang has strong scientific and technological strength, and the prime minister highly praised the accelerated development. Zhuolang Technology was founded in 2009, the main business is to rely on big data, cloud computing and other traditional manufacturing transformation and upgrading to provide technology and information services. Zhuolang Technology currently provides cloud computing services to 48000 enterprises and helps 17000 enterprises to connect with government departments. Among the 40,000 enterprises served by Zhuolang Technology, most of them are traditional manufacturing industries, of which more than 15% are large enterprises. the company mainly carries out intelligent transformation of the equipment products of these large enterprises and provides software and other services. The founder of the company, Zhang Kunyu, founded Zhuolang Technology after graduating in 2008, with strong strength and foresight. The core product of Zhuolang Technology is the integrated system platform, whose highlight is the "transformation and upgrading platform for ten thousand enterprises" built in 2015, with more than 200,000 registered software engineers on the platform. Since its launch, the platform has rapidly "converged the industry and docked the government and enterprises". Since its establishment, Zhuolang Technology has experienced five years of great-leap-forward growth, with its main revenue business growing from 9.3 million yuan to 580 million yuan in 2015, with a net profit of more than 70 million yuan in 2015. From January to June 2016, the company achieved sales revenue of 450 million yuan. In September 2015, Tianjin Songjiang increased its capital to Zhuolang Technology by 312 million yuan through the partnership fund, acquiring 39 per cent of its equity, making it the second largest shareholder. We believe that the Prime Minister's affirmation and high hopes demonstrate Zhuolang's strong scientific and technological strength, and at the same time provide sufficient impetus for the rapid development of Zhuolang.
Zhuolang science and technology helps Tianjin Songjiang to build a smart city. Tianjin Songjiang began to promote the overall planning and top-level design of "Smart Nankai", a smart city project in Nankai District in 2015. Zhuolang's scientific and technological strength and past project experience fully match Tianjin Songjiang Wisdom Nankai project. we believe that Zhuolang's strong strength will not only contribute to the completion of the Intelligent Nankai project. and it will provide strong support for Tianjin Songjiang to develop into big data, Smart City, Internet of things and other fields.
Accelerate the divestiture of the real estate business and return cash quickly. Since the backdoor listing of the company in 2009, there has been less financing in the capital market, resulting in high financial costs. In this context, the company on the one hand actively layout diversified development, at the same time through the project equity, construction transfer and other ways to peel off the real estate project, to achieve rapid capital return. Since the beginning of this year, the company has accelerated the transfer of the project, the company has announced that it will transfer the waterfront Tianyuan project with 656 million yuan and the Tianxi Park project with 180 million yuan, and the transfer work is continuing.
Investment suggestion: Zhuolang has strong scientific and technological strength, which is conducive to the rapid expansion and development of the company in big data, Smart City and other fields. The company accelerates the divestiture of the real estate business, returns the cash, and firmly transforms. We are optimistic that the company has a broad space for future development in areas such as smart cities. Considering the passage of additional offerings, it is estimated that the EPS in 2016-2017 will be 0.11,0.31 yuan respectively, corresponding to 54 and 19 times of PE, respectively, maintaining the "overweight" rating.
Risk hint: real estate sales fell sharply; diversification did not meet expectations.