UFIDA (600588): 2Q results are pleasing; NCC rolls out quickly to accelerate substitution

UFIDA (600588): 2Q results are pleasing; NCC rolls out quickly to accelerate substitution

U2’s second-quarter results in 2019 are in line with expectations UFIDA’s second-quarter results in 2019 are in line with our expectations: revenue reached 20.

6.1 billion, an annual increase of 6.

7%.

Net profit attributable to mothers was achieved 4.

00 ppm, an increase of 72 in ten years.

8%; net profit attributable to mother in the second quarter was 4.

82 million US dollars, an annual increase of 290%, a year-on-year increase of 40 over the same period last year.

5%.

Development Trend NCC made a rapid breakthrough and harvested the dividend of accelerated enterprise cloud transformation.

NCC is the company’s cloudization product for high-end enterprises.

With the release in December 2018 and a version update in March 2019, the promotion of NCC products has accelerated significantly.

As of the end of June 2019, 100 orders have been signed, with an average contract value of 1.45 million, which is higher than the main domestic interest.

In addition, the company’s principled suspension of the old version of NC products (which requires special approval to sell) at the end of June 2019 is reflected in the unprecedented consistency of cloud conversion and strong confidence in the product.

The data from IDC shows that the digital transformation of enterprises is accelerating. We believe that UFIDA is trying to continue to benefit from this new dividend.

Layout for the future and develop talent reserves.

Benefiting from the rapid growth of the revenue side and the effective control of selling expenses and management expenses (reduced by 2% and 5% annually in the first half of the year), UFIDA is expected to usher in a honeymoon period on the profit side.

Based on this, the company’s management stated that it would actively date more middle-level and senior-level experts with a portion of its excess profits, continue to polish its products, and accumulate potential for the company’s long-term energy storage.

Pay attention to localization potential.

The trade friction gradually releases domestic demand for domestic production. Domestic ERP manufacturers represented by UFIDA and Kingdee are actively entering the domestic replacement market for large and medium-sized customers represented by state-owned enterprises and institutions.

For example, the company’s order with Sichuan Airport realized a replacement for Oracle ERP products.

We believe that the replacement of large customers will not only benefit the company’s finances, but also provide a rare opportunity for the company to continuously polish its products and adapt to more advanced management methods.

Earnings forecasts and projections As the cloud transformation progress exceeded expectations and the financial cloud business was affected by continued policies, we slightly cut our revenue for 2019/2020 by 7% / 10% to 88 ppm / US $ 10.4 billion.

Taking into account the significant effect of reducing fees and increasing efficiency, we increase the net profit attributable to mothers by 31 in 2019/2020.

7% / 19.

4% to 10.

13 ppm / 12.

5.9 billion.

Currently 青岛夜网 corresponds to 76 in 2019/2020.

6 times / 61.

6 times price-earnings ratio.

Maintain Outperform rating and 38.

The target price of 00 yuan corresponds to 93.

3x 2019 P / E ratio and 75.

1x 2020 price-earnings ratio, compared with the recent merger of 21.

8% upside.

Risky new products are less competitive than expected; progress in cloud transformation is hampered.