\u3000\u3000 Zhejiang Heda Technology Co.Ltd(688296) (688296)
It has been a leading enterprise in intelligent water-saving informatization for 20 years. Zhejiang Heda Technology Co.Ltd(688296) apply the new generation of information technologies such as Internet of things, big data and edge computing to the water information industry, covering the whole business chain from consulting, design, construction, operation and maintenance and hosting services. At present, it has software systems and intelligent sensing terminals covering the whole business process of water management, and has established a core ecosystem, Gradually form a business model of “software platform driven + intelligent hardware supporting”. Looking at the past growth, the year-on-year growth rate of revenue in 2018-2020 was 32% / 45% / 54% respectively, and the year-on-year growth rate of net profit attributable to the parent was – 43% / 147% / 141% respectively. Technical products and market expansion consolidated the company’s leading position in the intelligent water-saving information industry.
The water information industry has ushered in a golden period of development. (1) The growth rate of the industry is considerable, up to 26%: the water industry is a basic industry related to the national economy and the people’s livelihood. Under the background of water saving and energy saving, the characteristics of information technology enabled traditional industries represented by big data and the Internet of things are more obvious, and traditional industries can effectively carry out digital transformation. In 2020, the investment scale of China’s smart water will reach 12.6 billion yuan. It is expected that the investment scale will reach 25.1 billion yuan in 2023, with a compound annual growth rate of 25.83%. (2) Market concentration is expected to improve: on the premise of growing market demand, the smart water industry is poised to usher in a balance between supply and demand. On the demand side, the acceleration of urbanization construction and the catalytic pull of water supply leakage control policy have ushered in, and the increment of demand elasticity is very obvious. On the supply side, smart water enterprises show regional characteristics. At present, the concentration of China’s water industry is low, and the market share of the largest water group is no more than 5%. The obvious geographical distribution of upstream customers also leads to the scattered pattern of downstream smart water. The leading enterprises represented by Zhejiang Heda Technology Co.Ltd(688296) continue to shape their brand competitive advantage after listing and fund-raising. In the future, they can expand the market through mergers and other means, and the market concentration is expected to continue to improve. Beijing Vastdata Technology Co.Ltd(603138) flow to build core competitive advantage. The key core competitiveness of the water information market lies in the software algorithm based on data flow. In contrast, some competitors adopt the hardware based Internet of things playing method. Zhejiang Heda Technology Co.Ltd(688296) the key core competitiveness is to accumulate a large amount of data and form an overall solution based on software model. At present, the company serves more than 500 customers. Based on the data platform, the company accumulates Beijing Vastdata Technology Co.Ltd(603138) flow through rich water “konw how” to form core value. Based on the continuous improvement of the algorithm platform, the company is expected to achieve rapid remote replication and expansion, Beijing Vastdata Technology Co.Ltd(603138) flow has a strong positive feedback effect on business development.
Profit forecast and investment rating of the company: we predict that the net profit attributable to the parent company from 2021 to 2023 will be 109 / 174 / 250 million respectively, and the corresponding EPS will be 1.11/1.76/2.54 yuan respectively. The current share price corresponds to the PE value from 2021 to 2023, which is 37 / 23 / 16 times respectively. Optimistic about the rapid improvement of the prosperity of the water information industry under the background of water saving and energy saving, the company’s products have realized the layout of the whole industrial chain of water supply and drainage, and the value of the company’s core data flow is underestimated. From the perspective of three-year time dimension, the company’s future net profit growth rate is 51%. The company belongs to the high growth target of small and beautiful. It can be matched according to the peg valuation method. The PE valuation center can be 35-40x. The mid-term market value target in 2022 is 6.1-7 billion. Calculated according to the median value of 6.5 billion, there is 48% room for growth. “Strongly recommended” rating for the first coverage.
Risk tip: the growth of market demand driven by policies is less than expected; The market development is not as expected, resulting in the deterioration of the competition pattern; Technology research and development and product service promotion were not as expected.
