I. Overview of events
The company announced on July 10 that it had signed the 2016 Framework Agreement on the purchase of banknote sorter equipment with Postal savings, with a contract amount of 8863051.00 yuan. In addition, the company announced that it had received a "bid winning notice" from the office of Bank of Guangzhou Co., Ltd., and became the shortlisted supplier of semi-automatic banknote binding machine and automatic subpoena binding machine of Guangzhou Bank.
II. Analysis and judgment
The company's business has won the bid one after another, and the business growth continues to lead.
The revenue volume of postal savings orders is expected to account for 3.37% of the company's total revenue in 2016. if the contract is completed smoothly according to the agreed schedule, it will have a positive impact on the company's operating performance in 2017. On the same day, the company announced the supply business of semi-automatic banknote binding machine and automatic subpoena binding machine of Guangzhou Bank. The company has recently performed well in the market, winning bids for Nanjing Bank, Shanghai Bank, Postal savings Bank and Guangzhou business one after another, winning huge orders one after another. We believe that Guao Science and Technology has relatively sufficient orders in the first half of 2017, the annual performance has increased, and the future performance is expected.
Technology and market advantages help the company to lead the financial equipment industry
The company is a comprehensive high-tech enterprise engaged in the research and development, production, sales and service of financial equipment, and is a professional service provider of financial equipment products in China. With advanced and high quality products and excellent after-sales service, the company has successfully become the supplier of Industrial and Commercial Bank of China, Agricultural Bank Of China, Bank of China Ltd., China Construction Bank Corporation, Bank of Communications, Postal savings Bank of China, China Merchants Bank, China Minsheng Banking Corp, China CITIC Bank Corporation, Everbright Bank, Pudong Development Bank and other major domestic commercial banks. "Guao" products not only sell well in the domestic financial market, but also are favored by overseas customers and are exported to Europe, America, Southeast Asia and other regions. Through years of independent innovation and absorption and introduction, the company's technology in many aspects has reached the international advanced level. We believe that Guao Technology is expected to continue to maintain a leading position in the industry by virtue of its own technological advantages.
The industry ushered in seasonal periodic changes, and the company's performance fluctuated.
Guao Technology's performance report for the first half of 2017 showed that its net profit fell 134.26% by 154.82% compared with the same period last year. This performance change is mainly due to 1) the lower-than-expected revenue in the first half of the year due to the delay in the start-up time of the company's major customers. 2) affected by the seasonal cycle of the industry. 3) the company continues to increase its R & D investment in order to adapt to market changes, resulting in an increase in cost. We believe that although the performance in the first half of the year falls short of expectations, due to the strong seasonality of the procurement model of banks and other financial institutions, this can not be used as the main reference for forecasting the annual performance. In contrast, the company Q1 realized revenue of 345 million yuan, an increase of 3.29% over the same period last year, which shows that the company's performance still has development potential.
High R & D investment drives technological innovation, further optimizes production and reduces costs
The company has always attached great importance to R & D and innovation, always paying attention to the development trend of the industry, constantly tracking and absorbing the latest technology at home and abroad, and providing strong support for product upgrading and innovation. At present, the company has obtained 78 invention patents, 59 computer software copyright, 304 utility model patents and 41 design patents. It has obvious technical advantages in the industry. The company's scientific and technological research and development work helps to improve the utilization of the production line and reduce the cost of production. In 2016, the company invested 31.8909 million yuan in R & D, an increase of 31.77% over the same period last year. According to the company's strategic plan, the company will continue to increase R & D investment in 2017 to further enhance the company's R & D level and core competitiveness.
Investment advice and profit Forecast
It is estimated that the EPS of the company from 2017 to 2019 is 0.62,0.80 and 0.92 yuan respectively. The business outlook is good. We forecast that PE will ask 59.7X, 46.4X and 40.4X for 2017-2019, respectively, and give a valuation range of 65-70X over the next 12 months, corresponding to a share price of 40.3-43.4 yuan.
IV. Risk hints
1) major technical risks; 2) the growth sector is not up to expectations.
