Category: Money tips Release Date: 2006-12-01
Matters:
February 16, Neusoft shares issued 2006 annual report, as well as details of merger announcement. Neusoft shares 06EPS 0.28 yuan, and the market consistent with prior expectations. Worthy of attention are: one, to the combined Neusoft stock company as a benchmark to simulate the financial statements show in 2006 EPS was 0.47 yuan in 2007 EPS Results is committed to 0.712 yuan, compared with 2006 increased 51%; 2, the Group's outsourcing business gross margin was 66%, significantly higher than that of hearing the software, in line with our previous judgments.
Comments:
Neusoft Group's outsourcing business gross margin was 66%, in line with the profitability of domestic solutions business to judge mainly by the stock company to implement, so Neusoft Group and shares the company's software and software services on the main difference between the size of the Group's outsourcing business . In 2006, the software, the difference in 2005 compared with an increase of 71% gross margin from 61% to 66%; in the software outsourcing industry in line with our basic judgments: As the main Neusoft is the embedded software outsourcing, and the size of the first domestic 1, so its profitability should be higher than in the hearing software, the growth rate of not less than the industry average (40%).
The growth rate of the software outsourcing business in line with expectations
In 2006, the shares of the company's software outsourcing business has reached 55.48 million U.S. dollars, grew by 60.9%; in 2006, including the shares of the company group, including the total size of the software outsourcing business has reached 100.64 million U.S. dollars, grew by 56%. Its size and growth are higher than the previous macro-judgment: the hearing in relation to the software in 2006 the size of about 330 million yuan, 35% growth, Neusoft is far higher than the domestic ranks second in the professional software outsourcing company.
Embedded Software into the period of rapid growth, high barriers to making a profit can guarantee
We believe: In the software outsourcing business, and the proximity of the client, is to determine the value of the software outsourcing company, one of the key factors. Neusoft to embedded software development as a direction close to the customers, while its large-scale IT enterprises, international strategic investors, it also has cut into the background of European and American markets.
Came from Japan's software outsourcing service market development, the first is the beginning to our contracting business software; With the outsourcing of domestic software connect the package capacity, Japanese manufacturers have begun to accept the concept of outsourcing began to China a large-scale contracting, embedded software outsourcing business has begun to enter fast-growth stage.
Embedded software on the machine because it contains an understanding of the technical barriers are even higher, the required basis for a longer accumulated experience in commercial software development. Thus, in the early entry, embedded software development, personnel quality, due to higher investment, making their relative rates of return are not significantly higher than commercial software. However, with the accumulation of experience, high-end embedded software more accessible to the upgrading of business, and has a better exclusive, natural way to avoid the impact of competition on business profitability.
In addition, the software outsourcing company's core lies in the management, and management of the core is represented by the operating rate (personnel utilization). From the perspective of capacity utilization, industry advantages of the level of the company's usually 80%. Neusoft Group and the outsourcing of 66% gross profit margin was confirmed the company's strong cost management capabilities.
Neusoft Group after 10 years of development, the current staff size has reached 10583, in which outsourcing of about 7,000 personnel, is currently the largest software outsourcing company. On the ISO quality management concepts and CMM quality management concepts to understand and absorb large-scale personnel management experience, follow-up reserves of self-training staff so that the scale of business a smooth rise, instead of using high-priced acquisitions.
Therefore, we think: With regard to the software outsourcing industry, the Neusoft share has passed the risk period and entered a stable and high growth phase. As the software outsourcing industry, long-term stability can be seen 30-40% growth, its average annual profit growth will be fully translated into the growth of stock value, and therefore ideal for the growth and value on investment targets.
PE is a reasonable :43-49-fold to maintain the recommended investment grade
In our "software outsourcing industry: low-input high return, low risk and high growth" of the study, based on industry characteristics of a high degree of consistency, as well as the stability of high growth can be expected, by the cost of capital between different countries, industries and companies the analysis of the expected growth prospects, we believe that in the domestic software outsourcing market, the company's reasonable PE at 42.8-49 times; promised by the company EPS of 0.712 yuan, based on 40% of the industry average growth rate of the company's expectations as , 07,08,09-year EPS were 0.712 yuan, 0.997 yuan and 1.396 yuan; to 42.8-49 times the PE calculation, to determine a reasonable price for the current corporate 30.5-34.9 yuan; year, a reasonable price for the 42.7-48.8 million; two years, the reasonable price of 59.7-68.4 yuan, respectively, compared with the current share price, the 22-40% ,71-95% gain.
Based on this profit forecast to a valuation from a conservative judge, the future still exists the possibility of performance rose more than expected. The software outsourcing industry, high stability, their annual profit growth will be converted into stock prices to rise. Based on the industry and the company's strong judgments, we believe that: Neusoft shares are a very good investment with a long-term value variety, recommended to maintain an investment grade company.
