Matters
The company released its annual report for 2015, with an operating income of 1.501 billion yuan, an increase of 91.41% over the same period last year, and a net profit of 167 million yuan for shareholders of listed companies, an increase of 200.52% over the same period last year.
Comments:
The performance is in line with market expectations, and "Communication Manufacturing + Information Service" promotes platform operation. The substantial increase in revenue and net profit of the company mainly comes from mergers and acquisitions: 1, the Capital Interconnection consolidated table for the whole year, with an operating income of 765 million yuan (204 million yuan in 2014); 2, mutual advertising contributed 202 million yuan to the income of listed companies. The net profit rate of subsidiary Guodu Interconnection and Mutual Advertising is higher than that of Wutong's traditional business, and thickens the net profit performance of listed companies. From 2013 to 2015, the company has successively acquired wide-wing communications, national capital interconnection and mutual advertising, expanding from communication RF connection system suppliers to "communication manufacturing + information service" platform vendors, and it is expected that endogenesis and extension will accelerate synchronously in the future.
National interconnection: enterprise short message business is growing steadily, and traffic operation is expected to open up new growth space. The rapid development of mobile Internet services such as online payment and O2O brings the demand of enterprise SMS such as registration verification, logistics / order notification and so on. China Capital Interconnection is in the first echelon of third-party enterprise SMS service providers. In 2015, it completed the contract renewal work of Agricultural Bank Of China and CCB, strengthened in-depth cooperation with customers such as Letv and Jumei, and opened up high-quality customers such as BABA. We expect the company's SMS delivery volume to maintain a growth of about 30% in 2016. In addition to enterprise SMS, the company revolves around the existing operators and cooperative customer resources, speeds up the expansion of traffic operation business, and explores new areas such as mobile information service platform, which is expected to open up new growth space in the future.
Mutual advertising: technology-leading big data precision marketing business. Mutual Advertising takes SSP as its main business model, and has established media procurement cooperation with nearly 100 media, including digital advertising platforms such as JD.com and Juxiang, and programmed buyers such as Baidu, Inc. and Alphabet Inc-CL C, to carry out intelligent delivery combined with big data's analysis to improve the marketing effect of the advertising demand side and promote the sustained growth of the business. The company continues to expand its media resources, with an average daily display volume of about 1 billion, including access to more than 30 high-quality WAP media to promote mobile APP advertising.
Risk factors: impairment risk of goodwill of the subject matter of M & A, decline of traditional business.
Maintain the "overweight" rating. The company's three major businesses are developing well, and the national capital interconnection and mutual advertising have leading advantages in customer resources and service capabilities. The company's proposed establishment of "Suzhou Wutong Investment Co., Ltd." is expected to further accelerate the expansion of "communication manufacturing + information services". Taking into account the mutual advertising table and dilution, raised the company's 2016-2017 EPS forecast for 0.93 yuan 1.33 yuan (the original forecast 0.89Universe 1.18 yuan; if you do not consider the merge table is 0.49max 0.65 yuan), the new 2018 EPS forecast for 1.80 yuan, taking into account the company is still in the suspension stage, temporarily maintain the "overweight" rating, the follow-up will follow up our judgment after the resumption of trading.