Baoxin Software (600845) 2018 Annual Report Comments: High-speed Growth in Performance and Improved Profitability

High performance growth was in line with expectations. In the first quarter of 19, revenue growth increased. The company released its 2018 annual report and 2019 first quarter report. The high performance growth in 2018 was slightly higher than expected.

Operating income at the beginning of 201854.

700 million (+14.

6%), net profit attributable to mother 6.

700 million (+57.

3%) and a net operating cash inflow of 9.

700 million (+24.

5%).

1Q1 operating income13.

500 million (+32.

6%), net profit attributable to mother 2.

.

0 billion (+36.

4%), net operating cash inflows 2.

800 million (+ 166.

5%).

The net profit attributable to mothers in 18 years and 19Q1 maintained a rapid growth. The operating income of 19Q1 increased significantly, and the overall performance was in line with expectations.

The company paid dividends to all shareholders for every 10 shares for 3 years.

8 yuan (including tax), 3 shares for every 10 shares.

The company’s business structure continues to be optimized, and its profitability has improved significantly. In terms of business, it has benefited from the improvement of the iron and steel industry’s prosperity, the growth of information and automation business requirements, and the strategic replacement of intelligent business.35.
2.2 billion (+5.

3%), the product structure is further optimized.

The number of racks on the shelves of IDC business continued to increase, the racking rate continued to rise, and service outsourcing revenue was 16.

9 billion (+36.

8%).

System integration operating income was 2.

4.2 billion (+31.

5%).

IDC business is the main driving force for the company’s performance growth.

The revenue growth rate in 19Q1 exceeded expectations, mainly because the average listing rate of Phase IV of Baozhiyun increased significantly.

From a cost perspective, the consolidated gross profit margin for 2018 was 27.

9% (+1.

3pp), of which software development and engineering services gross margin is 20.

7 (-1.

1pp), gross margin of service outsourcing is 45.

0% (+3.

3pp), system integration gross margin 9.

1% (-0.
4 pp).
The main reason is that the average listing rate of IDC projects in 2018 has increased significantly, increasing the overall gross profit margin of the business.

In 2019, the company’s profitability was further improved, with a consolidated gross profit margin of 30 in 19Q1.

2%.

From the perspective of fees, the three-year fee control in 18 years is effective, exceeding the previous decline.

Selling expense ratio 2.

7% (-0.

2 西安耍耍网 pp), overhead rate 3.

1% (-0.

2 pp), R & D expense ratio is 10.

1% (-0.

8 pp).

The 19-year R & D expense ratio fell further by 2 pp.

19 years of IDC orders accelerated delivery, iron and steel informatization boom continued for 18 years, the company’s third phase of the delivery of Baozhiyun completed, a total of 17,500 cabinets, 19Q1 delivered more than 1,000 cabinets, the fourth phase of 9,000 cabinets is expected to be completed in 19, IDCThe business will maintain high-speed growth in 19 years, meanwhile, the prosperity of steel informatization will continue. In 19 years, operating income and net profit attributable to mothers will maintain high-speed growth.

Risk reminder: Information orders are less than expected, IDC construction is less than expected, and policy risks.

Investment suggestion:成都桑拿网 Maintain “Buy” rating.

Expected net profit attributable to mothers in 2019-2021.

6/10.

5/12.

9 ppm, a year-on-year growth rate of 28/22/23%, corresponding to PE = 32/27 / 22x, maintaining the “Buy” rating.