Three Six Zero (601360): Entering the government and enterprise security market and building a large security ecology

Three Six Zero (601360): Entering the government and enterprise security market and building a large security ecology

Performance is in line with expectations.

The company released its 2018 annual report and initially realized revenue of 131.

2.9 billion, a ten-year growth of 7.

28%, net profit attributable to mother 35.

35 ppm, a ten-year increase4.

83%, deducting non-net profit 34.

1.8 billion, an annual increase of 24.

twenty two%.

The profit distribution plan is to pay 0 for every 10 shares.

53 yuan (including tax).

Cost and expense control are basically reasonable.

1) In terms of cost, the level of gross profit margin decreased from the same period last year3.

52 points.

2) In terms of expenses, the expense ratio during the period decreased by 2 compared with the same period last year.

04pct, mainly due to the decrease in financial expenses caused by the increase in interest on deposits, and the sales expense ratio and management expense ratio remained basically stable.

3) In terms of cash flow, net operating cash flow was realized.

4.8 billion.

Excessive fulfillment of performance commitments.

In 2018, the company exceeded 6.

6.8 billion yuan to complete performance commitments, of which 1) Internet advertising and service revenue 106.

580,000 yuan, an increase of 16 in ten years.

94%.

Mainly due to the optimization of product and business structure, technological innovation has promoted the improvement of efficiency, and the structure of advertisers has been improved. The company has expanded the commercialization monetization alliance and actively built an information flow ecosystem.

2) Revenue from Internet value-added services11.

78 ppm, a decrease of 30 per year.

63%, gross profit margin increased by 10 compared with the same period last year.

81 points.

Mainly because in 2018, the game industry broke through the double test of policy trends and traffic acquisition, and the overall industry scale growth rate.

However, the company’s game team adjusted its operating strategy in a timely manner, stopped the invalid external expansion release, improved the efficiency of resource utilization, and resulted in changes in the cost of related divisions and copyright fees.

3) Revenue from smart hardware business10.

1.5 billion, down 7 a year.

66%.

Entering the security market for government and enterprises with a built-in security ecosystem.

With reference to the announcement, in terms of future business plans, the company will 1) combine its own brand, technology and big data advantages, and actively seek rapid expansion in the government 重庆耍耍网 and enterprise security market, establish a professional team and group organizational structure, and do not rule out through cooperative development, strategyCooperation, investment, mergers and acquisitions, etc. quickly strengthen the company’s industry categories in the government and enterprise security market.

2) Focus on strengthening the application segmentation of “360 safety brain” industry.

It is planned to assist relevant departments to jointly build a “national-level cyber security brain” by combining upstream and downstream, and security-related companies on the industrial chain, to build the country’s key weapon, and to safeguard the homeland security in cyberspace.

And through strengthening itself and network security, city security-related industrial chain enterprises to carry out strategic cooperation, 武汉夜生活网 through the form of security empowerment, jointly build a large security ecology.

Investment suggestion: It is expected that EPS for 2019-2020 will be 0.65 yuan, 0.

74 yuan.

Maintain “Buy-A” rating and 6-month target price of 29 yuan.

Risk Warning: Increased Competition in Government and Enterprise Security Industry