Event

True Vision publishes the 2017 annual report. During the reporting period, the company realized operating income of 819 million yuan, an increase of 3.03% over the same period last year; the net profit of shareholders belonging to listed companies was 69.2815 million yuan, an increase of 0.36% over the same period last year; and the net profit of shareholders of listed companies after deducting non-recurrent profits and losses was 66.8093 million yuan, an increase of 4.93% over the same period last year.

Comment

The company continues to increase its R & D investment, and its net profit is basically the same as last year. During the reporting period, the company's R & D investment totaled 38.9099 million yuan, an increase of 15.33% over the same period last year, and the gross profit margin increased by 1 percentage point to 25.41% from 24.41% in 2016. The company's net profit is 69.2815 million yuan, which is basically the same as that in 2016. In addition, the company's liabilities in 2017 were 509 million yuan, an increase of 21.86 percent over the same period last year, including current liabilities of 491 million yuan and non-current liabilities of 18.0563 million yuan.

We will continue to accelerate regional development and stabilize the income structure. During the reporting period, the company set up a wholly-owned subsidiary in Changsha, Hunan Province, as the southern R & D center and southern technology center, and put the after-sales and operation and maintenance service personnel into regional territorial management. In addition, independent accounting has been carried out in some regions to further actively develop all regions except Beijing. Among them, the newly signed contract amount in North China exceeded 100 million yuan in 2017, and the newly signed contract amount in South China and other regions also increased by a large margin, ensuring the stability of the company's revenue and the sustainability of its future development. During the reporting period, the operating income of the North China region reached 511 million yuan, accounting for 62.45% of the business income, an increase of 3.79% over the same period last year; the revenue of the Central China region reached 98.557 million yuan, an increase of 91.10% over the same period last year; and the revenue of the South China region reached 65.5387 million yuan, an increase of 14.76%. In addition, from the perspective of the industry, the company achieved revenue of 92.7444 million yuan in the transportation industry during the reporting period, an increase of 98.95% over the same period last year.

It is optimistic that the new business under the company's business + strategy will become an important performance growth point of the company in the future. The company's strategic positioning is accurate, combined with its own business advantages, technological advantages, continue to actively develop business +, industry + and regional + strategy. During the reporting period, the company's new businesses such as cloud video, cloud simulation, military-civilian integration, Internet of things and Smart +, big data and Intelligent + were progressing smoothly, and the company had development and research plans in all business areas in 2018. Under the general trend of cloud business development, as long as the new business can be carried out smoothly, it will have the opportunity to become an important performance growth point of the company in the future.

Valuation

We forecast that the company's operating income in 2018 and 2019 will be 952 million and 1.16 billion respectively, and the earnings per share will be 0.50 yuan and 0.62 yuan respectively.