CSCI-Stock Connect-Thunder Software Technology (300496 CH)：Opening up new fronts - 20171023
Opening up new fronts
A leading provider of smart operating system solutions. While mobile chips are headline-grabbing, mobile operating systems play an equally critical part in the mobile Internet industry chain. Thundersoft, a leading provider of smart operating system solutions, enjoys a clear advantage in terms of operating revenues and gross margins compared with its A-share competitors. Moreover, it counts global chip giants Qualcomm and Spreadtrum as its shareholders. The two currently contribute to more than 20% of Thundersoft’s total operating revenue.
Sustainable growth on transformation. To preempt a revenue plateau, Thundersoft launched the Strategic 2.0 initiative in 2012, featuring stand-alone software products and standardized modules and starting to charge customers based on volume instead of projects to unlock smart hardware growth potential and improve gross margins. Smart hardware was responsible for RMB128mn of Thundersoft’s operating revenue in 2016, a massive YoY growth of 373.85%.
Acquiring into the in-vehicle system industry. Thundersoft bought out APPSYS and Huichi Technology in Apr. 2016 for RMB102.6mn in cash—both are experts in pre-installed IVI systems, and pushed deeper into the in-vehicle system market by taking over Rightware, a world famous producer of in-vehicle digital instrument clusters. Thundersoft’s in-vehicle system business brought in an operating revenue of RMB46.2031mn in 2016, up 68.88% YoY.
Profitability forecast. We estimate Thundersoft will notch up an operating revenue of RMB1.07bn/1.316bn for FY17/18, corresponding to a net profit of RMB138mn/175mn and EPS of RMB0.35/0.43. Recommend an Outperform rating.
Risk factor. Smart hardware partners’ shipments may fall short of expectations.
Thunder Software Technology Co., Ltd. is a provider of mobile intelligent terminal operating system platforms and platform technologies. The Company is mainly engaged in the research and development and sales of mobile intelligent terminal operating systems, as well as the provision of related technical services, software products and software and hardware integration solutions. The products and services of the Company are used in Internet of Things (IOT) intelligent terminals, including smart phones, intelligent vehicle systems and intelligent hardware, among others. The Company operates businesses in China, Europe and America and Japan, among others.
中信建投国际研究部是中信建投证券香港子公司中信建投国际下属研究部门，负责香港上市公司、行业和宏观研究。我们的研究产品和服务包括行业报告、公司、宏观、常规日报、新闻摘要、分析员路演、上市公司非交易路演和反向路演 以及策略会。
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