Event: on January 7, 2019, the company released three important announcements: (1) Shanghai Yunxin, a wholly-owned subsidiary of Ant Gold Service, intends to be transferred 30.21 million shares of the company held by Yang Weiguo, Fu Qiusheng, Shang Weiguo and others. After the completion of the transfer, Shanghai Yunxin will hold 6.28% of the company's equity; (2) Shanghai Yunxin intends to increase the capital of its wholly-owned subsidiary Perfect Digital Union with 250 million yuan. After the completion of the capital increase, Shanghai Yunxin will hold 30% equity in the subsidiary Perfect Numerical Union; (3) the company, the subsidiary Perfect Numerical Union and Shanghai Yunxin signed a cooperation agreement, Shanghai Yunxin will carry out in-depth cooperation with the company and its subsidiaries in the field of education informatization, and promote the transformation of Xinkai Pu into an industrial Internet, Internet of Things technology service company in the education informatization industry.

Comment: giant shares, the company's strategic card value is highly recognized. According to the 2018 half-yearly report, the company's campus informatization products cover a total of more than a thousand colleges and universities, with a market share of more than 40%. Through two acquisitions, the company has realized the evolution of the whole product line from one card to smart campus, significantly improving the overall capacity. Online + offline resource integration, prompting the gradual landing of the new ecology, high viscosity and scale effect to further consolidate the company's leading position in the industry. The Ali system shares, indicating that the company's value of the strategic card in the field of college information technology is highly recognized by the giant.

At the same time shareholding in the company and subsidiaries, indicating that the giant attaches great importance to the depth of the business synergy is worth looking forward to. The Shanghai Yunxin at the same time shares listed companies and subsidiaries perfect digital link, indicating that the Ali Department of the company attaches great importance to the high degree. Combined with Ant Financial Services' Internet operation experience, technical advantages and ecosystem integration capability, it is expected to enhance the overall smart campus products and service capabilities of XKP, as well as the innovation capability and operation capability of XKP's industrial Internet platform, SaaS service and intelligent terminal series products. The deep synergistic cooperation between the two sides will promote the transformation of XKP into an industrial Internet and Internet of Things (IoT) technology service company in the education informatization industry.

The capital increase of subsidiary Perfect Digital Union strengthens the entrance value, and "Perfect Campus" is expected to accelerate the realization. According to the 2017 annual report, the perfect campus APP has covered 10 million users, doubling from 2016. The company's online platform has strategic positioning value, and the entrance value of virtual campus card and Perfect Campus APP is remarkable. With Shanghai Yunxin's capital increase in Perfect Campus, Perfect Campus will integrate the industry ecology and make Perfect Campus the official comprehensive service portal for college students in China. The company is expected to realize accelerated cash flow through online value-added services, big data analysis, e-commerce, inclusive finance and other modes.

Investment advice: without taking into account the synergistic effect, maintain the profit forecast unchanged, it is expected that the company 2019 ~ 2020: the company realized a net profit of 120 million and 159 million yuan. The company has a clear advantage of the card, hand in hand with ants gold service to bring synergistic effect, optimistic about the company's business expansion and business model upgrade prospects, maintain the "buy" rating.

(Article source: Tianfeng Securities)