\u3000\u3000 Sinosoft Co.Ltd(603927) (603927)
The performance continued to grow and the business quality improved steadily. Sinosoft Co.Ltd(603927) was founded in 1996. After years of development, the company’s customers have covered various industries such as insurance, banking, securities, medical treatment, government affairs, education and transportation, and formed leading advantages in the subdivided application fields of insurance, public health and other industries. In terms of operating performance, the company’s data is outstanding: operating revenue continues to grow. The operating revenue increased from 1.221 billion yuan in 2010 to 5.782 billion yuan in 2020, with a 10-year CAGR of 17%. Even if affected by the epidemic in 2020, it also achieved a year-on-year increase of 5.14%;
The improvement of business structure drives the rapid growth of profit, human efficiency and other indicators, showing an accelerating trend. The proportion of business customized software in revenue continued to increase, nearly 75% in 2020, and the proportion of system integration business continued to decline. The net profit increased from 62 million yuan in 2010 to 477 million yuan in 2020, with a CAGR of 22.6% in ten years and 26.6% in recent three years, showing an accelerating trend. The per capita profit increased from 18000 yuan in 2017 to 26000 yuan in 2020;
The quality of operating income and net profit is very high, and the net cash ratio and cash to cash ratio continue to be higher than 1. The cumulative ratios in the past ten years are 1.56 and 1.08 respectively.
Insurance it development space can be expected, and the company occupies a dominant position. From 2010 to 2017, China’s Insurance IT investment increased from 9.8 billion yuan to 22.5 billion yuan, with a CAGR of 12.6%; Meanwhile, the insurance it solution market increased from 6.54 billion yuan in 2017 to 12.14 billion yuan in 2020, with a CAGR of 23%. In 2020, the proportion of China’s Insurance IT investment in revenue will be 0.63%, the target of the 14th five year plan will exceed 1%, and that of overseas will be about 5%. Superimposed on the growth of China’s insurance industry itself, the insurance it solution market will maintain a high-speed growth trend in the future. The company has been deeply engaged in the insurance it field for a long time and is the absolute leader of the industry. More than half of its operating revenue in 2020 comes from the insurance industry, accounting for 35% of the market share of insurance it solutions, which will fully benefit from the growth of the industry.
The “insurance +” strategy expands the company’s business boundary and actively engages in cloud computing business. Sinosoft Co.Ltd(603927) put forward the “insurance +” strategy in 2015 to build an it bridge between the insurance industry and other industries. In banking, securities and other non insurance financial fields, the revenue will reach 705 million yuan in 2020, with CAGR reaching 23.7% in recent five years and 34.3% in recent three years; In the field of medical and health care, the company had more than 60 hospital customers in 2020, with an income of 206 million yuan, a year-on-year increase of 50.18%. In addition, by establishing cooperative relations with mainstream manufacturers such as Tencent, Huawei, Alibaba and AWS, the company took the lead in successfully implementing a number of projects to migrate core business systems to the cloud in the insurance field, accounting for 36.2% of the insurance cloud solution segment.
Profit forecast and investment suggestions: it is estimated that the operating revenue of the company from 2021 to 2023 will be 6.489 billion yuan / 7.260 billion yuan / 8.092 billion yuan respectively, the net profit attributable to the parent company will be 586 million yuan / 715 million yuan / 857 million yuan respectively, the corresponding EPS will be 0.99 yuan / 1.20 yuan / 1.44 yuan respectively, and the P / E will be 30 / 25 / 20 times respectively, giving a “buy” rating.
Risk tip: the regulatory policy changes, the pressure of talent competition intensifies, the new business expansion is less than expected, and the public data used in the research report may have the risk of information lag or untimely update.
