Related announcements:
On August 18, Rongji Software (002474) released its 2016 semi-annual report that the company's total operating income in the first half of the year was 266.5093 million yuan, an increase of 14.75% over the same period last year, and the net profit attributed to shareholders of listed companies was 16.1911 million yuan, down 17.76% from the same period last year. The performance is basically in line with the market and our expectations.
Announcement comments:
China's electronic inspection and quarantine backbone system has been put into trial operation and connected to the main line of the construction of "smart port".
Rongji Software has been engaged in the field of quality inspection informatization for 15 years, and has become the only contractor of China's electronic inspection and quarantine backbone system since 2012. at present, it has built a full-process, full-service, full-coverage China electronic inspection and quarantine core business system to achieve centralized management of data and applications. In May 2016, the China Electronic Inspection and Quarantine (e-CIQ) backbone system was launched in Beijing, Tianjin and Hebei. As the main line of the construction of the "smart port" support system in the 13th five-year Plan of the AQSIQ, e-CIQ backbone system not only helps to improve the work efficiency of the inspection and quarantine department, but also creates commercial value for the company, and consolidates the company's leading position in the field of quality inspection information.
The company will also continue to complete the AQSIQ e-CIQ backbone system service bus integration technology development project, information exchange platform project and application operation and maintenance project, and further expand and improve the business in the field of quality inspection information, which is expected to bring some relatively stable business income to the company in the future.
Win major business contracts to enhance the influence in the field of e-government. Rongji Software issued an announcement on December 21, 2015 to confirm the winning bid for Fujian emergency communications project Beidou and satellite system, with a total bid amount of 42.7681 million yuan. On the basis of the public location service platform in Fujian Province, the project will build a unified emergency Beidou location service system, Beidou early warning communication system and satellite communication system in Fujian Province. it is an important part of Fujian emergency communication guarantee capacity-building demonstration project. The implementation of this project will help to consolidate and enhance the influence and competitiveness of Rongji software in the traditional main business field of e-government.
Star Rongji illuminates new areas and guides the company's business transformation. Rongji Software established Fujian Star Rongji Information Technology Co., Ltd. (hereinafter referred to as Xingrongji) in October 2015 and acquired a controlling stake (71%). Xing Rongji has obtained the unique management right of the public service platform of the Internet of things in Fujian Province. On this basis, it can actively participate in the construction projects and standards related to the Internet of things of the government, operators and industries, and at the same time independently develop the core operation and application system of the Internet of things. Build a full ecological chain platform and strive to operate through the Internet of things public service platform for three to five years. Connect all kinds of intelligent devices and wearable devices to the Internet of things public service platform, and achieve unified management, deployment and testing, to create the largest ecological platform of the Internet of things in China.
In terms of building a public platform for information cloud services for small and medium-sized enterprises, Xing Rongji signed a business cooperation agreement with Fuzhou Branch of Industrial Bank Co., Ltd at the end of December 2015. By realizing the seamless docking of Fujian Internet of things public service platform, small and medium-sized enterprise information service platform, and government-related credit platform, the two sides will jointly explore and build a better enterprise financial service business system and a new financial service model based on the Internet of things technology. This cooperation will not only effectively improve the return on assets and shareholder value of Xing Rongji, but also help the company enrich the functions of the public platform for information-based cloud services for small and medium-sized enterprises and enhance the attractiveness and competitiveness of the platform. In January 2016, Xing Rongji received a reply from the Fujian Provincial Development and Reform Commission on the proposed public platform for information cloud services for small and medium-sized enterprises in Fujian Province. The public platform of cloud service for small and medium-sized enterprises in Fujian Province is committed to integrating the online and offline window advantages of enterprises in the service center of the Provincial Economic and Information Commission, the communication networks, service channels and capital advantages of operators, as well as the information technology and capital advantages of Fujian Electronics Group, so as to provide high-quality IT environment and integrated information service system for small and medium-sized enterprises. If this project goes smoothly, it will help to promote the further transformation of the company's business.
In May 2016, Xingrongji was selected into the first batch of third-party credit service agencies in Fujian Free Trade pilot Zone, which can provide services for the government in Fujian Free Trade pilot Zone to use credit rating reports and other credit work in administrative matters. It can also carry out credit services for enterprises or branches operating in the area, and further integrate into the strategic pattern of the construction of the government's social credit system.
We believe that the current business of Xingrongji is mainly related to the Internet of things platform and the service platform for small and medium-sized enterprises, which are close to the company's traditional business and technological background and have great imagination in the future. it plays a key role in the business innovation and transformation of Rongji software. Star Rongji has obtained a series of unique management rights and qualification recognition. With the continuous expansion and actual promotion of its business, Rongji software is expected to achieve breakthrough results in new business areas.
Investment advice:
We expect that under the premise that Rongji Software steadily expands and improves its business in the field of quality inspection information, and Xing Rongji makes substantial progress in the areas of Internet of things platform and SME service platform, Rongji Software's EPS in 2016 and 2017 is 0.042 yuan and 0.047 yuan respectively, corresponding to 359.76 times and 322.70 times respectively, compared with the current median value of 97.70 in the application software industry, the valuation level is higher. We continue to maintain its investment rating as "neutral" and advise investors to observe the actual development of the company in new business areas.
Risk Tips:
The construction or operation of the e-CIQ backbone system and its service bus integration technology development project, information exchange platform project, and application operation and maintenance project fell short of expectations; the bid-winning project did not advance as expected; and Xingrongji fell short of expectations in areas such as the Internet of things platform, Fujian Province small and medium-sized enterprise information cloud service public platform, and so on.
