The performance is in line with expectations. In the first three quarters of 2018, the company achieved revenue of 2.383 billion, up 15.41% from the same period last year; net profit was 158 million, down 23.65% from the same period last year, mainly due to more income from the disposal of long-term equity in the same period last year; deducting 142 million of non-net profit, an increase of 255.09% over the same period last year.
Operating cash flow has become positive by a large margin, and gross profit margin has increased. The company achieved operating cash flow of 53 million in the first three quarters of 2018, an increase of 113.65 percent over the same period last year, mainly due to an increase in collection and tax rebates in the first three quarters over the same period last year; gross profit margin was 29.66 percent, up 4.97 percent over the same period last year.
Buyback demonstrates the company's confidence in long-term development. The company recently announced that it intends to buy back the company's shares with 50 million yuan-100 million yuan, and the repurchase price does not exceed 12.72 yuan per share, demonstrating the company's confidence in the long-term development of the future.
The southwest cloud computing intelligent industry base project is worth looking forward to. The previous announcement of the company signed the Southwest Cloud Computing Intelligent Industry Base Project Cooperation Agreement with Chengdu Western things Group Co., Ltd., Wanhuitong Energy Technology Co., Ltd., and Chengdu Steel Vanadium Co., Ltd., Panzhihua Iron and Steel Group. According to IDC Circle, when the Southwest Cloud Computing project is completed, it will provide 10,000 4.5 kilowatt cabinets and accommodate 160000 servers for cloud computing and IDC infrastructure hosting and related services. After the overall operation reaches production, the scope of service will cover most of the southwest, making it the largest cloud computing data center in the southwest. According to the disclosure of the company, the current project implementation subsidiary Chengdu Netxin has been established and is promoting the construction of the first phase of the project as soon as possible, and the production and operation of the follow-up project is worth looking forward to.
Continue to develop social security innovation business. The company's mobile medical insurance payment APP-- medical express payment continues to open up the market, Zhejiang Province medical insurance mobile payment platform smoothly launched. In addition, the company has successively established strategic cooperative relations with Ant Financial Services Group and Ping an Medical, which highlights the strategic value of social security information business, and is also conducive to the accelerated landing of innovative business.
Investment advice: the company's business structure adjustment and asset integration have achieved initial results, various financial indicators are improving, and the follow-up is expected to maintain steady growth. It is estimated that the company's EPS in 2018 and 2019 will be 0.35,0.40 yuan, maintaining the buy-A rating, with a 6-month target price of 10 yuan.
Risk Tip: goodwill impairment risk.