Main points of investment:
Company announcement: on the basis of the previous cooperation memorandum, the company and Wuhan Dingshi, a subsidiary of Huaxia Happiness, signed a "cooperation agreement on smart home products" of 1000 sets; at the same time, the two sides also signed a number of 5000 sets of "letter of intent for cooperation of smart home products".
Favored by large developers, the company's smart home products commercial landing milestone. The company's smart home solution includes two core products: intelligent information box (control hub, which integrates multiple skills such as wireless network management, private cloud storage, home intelligent control, etc.) to achieve centralized management of household devices, seize the key entrance to the Internet of things era, and intelligent 4-combination 1AP (intelligent access point, compatible with a variety of terminal devices). The partner Wuhan Dingshi is an indirect holding subsidiary of Huaxia Happiness. According to the purchasing cooperation agreement, Wuhan Dingshi buys 1000 smart home products from the company. The company delivered 20% of the total order to the buyer in the first quarter of 2018, 30% in the second quarter of 2018, and the remaining 50% by December 20, 2018. At the same time, the two sides signed a "letter of intent for Cooperation in Smart Home products" with a quantity of 5000 sets, and the two sides will sign a formal purchase order according to the future needs of the buyer.
The popularity and influence of the company's smart home products have increased significantly, and more orders are expected to be landed. The company officially released its revolutionary smart home solution in September this year. Three months later, it won the approval of the well-known developer Huaxia Happy and the purchase intention of 5000 sets. It shows the high quality of the company's smart home products and the high efficiency of marketing. With the help of the strong marketing and promotion experience of Wuhan Dingshi real estate industry, this transaction will focus on the promotion of the company's smart home products, enhance the popularity and influence of the company's smart home products, and reduce the difficulty of expanding follow-up 2B customers. We believe that through cooperation with developers and home decoration companies, the company's smart home products are expected to expand rapidly and build an open Internet of things platform compatible with all kinds of home appliances.
A new display device project will be built in Wuhan to promote the steady development of the old business. The company will build a new Oying photoelectric display device and backlight module R & D and production project in Shuangliu Industrial New City, Xinzhou District, Wuhan City. The total investment of the project is expected to be about 1.5 billion yuan, and the annual output value of the project is expected to reach 1.5 billion yuan in 2019, 3 billion yuan in 2020, 5 billion yuan in 2021, and not less than 8 billion yuan from 2022. Wuhan Dingshi will provide the company with the construction of the project plant and give some support funds for the project construction, and the company will enjoy the relevant local tax preferential policies. The company's move will make full use of Wuhan's local policies and industrial supporting advantages to promote the steady development of the old business.
Maintain earnings forecasts and buy ratings. In June this year, the company's board of directors and senior management team changed greatly, the company as a whole took on a new look, the old business is regaining vitality, and the commercialization of new business has achieved results. And in October, the company successfully acquired a 30% stake in the big data industrialization platform of the Institute of Computing of the Chinese Academy of Sciences, and the IDC value-added business of subsidiary Nantong Qiyun has also contributed some profits. We are optimistic about the layout of the Internet of things for a long time, and the prosperity of the old business sector has rebounded. At the same time, the company's employee stock ownership plan has progressed steadily, and has completed the purchase of part of the average transaction price of 11.408 yuan per share, which is upside down with the current stock price. To maintain the profit forecast, it is estimated that the EPS for 17-19 is 0.10 pound 0.250.38 yuan, and the corresponding PE is 106-42-28 times.
Risk Tip: this transaction will not have a significant impact on the company's 2017 performance, smart home development is not as expected.