航天信息(600271.CN)

Aisino:Disappointing Q316results partially due to tax impact;we expect VAT business to surge

时间:16-11-01 00:00    来源:瑞银证券

Disappointing Q316 results, partially due to tax impact.

Aisino's revenue increased 14% but net profit declined 23% in 9M16, partially due to a62% YoY decline of non-operating income (mainly VAT refunds), while the businessincome tax rate increased to 21.2% from 16.7% in 9M15, quite common among listedsoftware companies. The reason may have been because the tax regulator has beenbusy pushing for tax reform while overlooking implementation of certain preferentialtax policies. Since there have been no changes in the preferential tax policiesthemselves, we believe this situation could improve by end-2016. Excluding thesefactors, Aisino's 9M16 net profit would have remained flat YoY.

Tax reform at a critical stage, with lots of work possibly delayed to 2017.

This is a critical year for "business to value-added" tax reform and the State Councilrequested the completion of it by end-2016. However, this target will be difficult toachieve due to the many enterprises involved. As the largest VAT anti-fraud systemdeveloper in China, Aisino has been affected and the company is benefitting from taxreform slower than expected. However, we believe business growth driven by taxreform simply has been partially postponed to 2017, while its market position and longtermgrowth potential have not been affected.

Strong software and system integration growth; acquisitions to be completed.

Aisino's software and system integration revenue increased 55% YoY in H116 – weestimate Q316 revenue growth was also mainly driven by software and systemintegration. The company's acquisitions of Sinobest and Aerospace Golden Shield wereapproved by the CSRC on 19 Sept. If the acquisitions are completed in Q416, Aisino'ssoftware and system integration business will be significantly strengthened, which willensure its sustained growth despite tax reform progress uncertainties.

Valuation: Maintain Buy rating and PT of Rmb29.00.

Aisino is trading at 20.3x/16.7x 2016E/17E PE, significantly lower than the industryaverage and lower than its historical valuation. Our price target of Rmb29.00 is basedon DCF, assuming WACC of 7.1%, and implies 22.7x 2017E PE.