Hundsun Technologies Inc(600570) (600570)
Event overview
November 27, 2021, Yunying network, the holding subsidiary of the company, is a supplementary fund management system product line (mainly complex derivatives and structured products), which enhances the IT service capacity of BOC and signs a transaction agreement with finastra, the global leader in financial technology, for us $65 million (about RMB 420 million) acquire summit business of finastra in this field. In addition, the company plans to increase the capital of Yunying network by RMB 630 million through its own funds, and the equity ratio is planned to change from 60% before the capital increase to 98.3% after the capital increase.
Analysis and judgment:
The acquisition of summit and the formation of bank it dual drive with opics are expected to make a breakthrough
Finastra is the world's leading financial technology company, and its summit is the leader in the field of fund management system. At present, it mainly provides business for large and medium-sized banks. Summit currently has 17 large and medium-sized bank customers in Greater China (including large state-owned banks). The company's acquisition of summit through Yunying network includes: 1) permanent use right of source code and other intellectual property rights; 2) the above 17 large and medium-sized bank customers and ongoing contracts. That is, the company can quickly cut into the key business areas of it of medium and large banks through this acquisition, and can cooperate with its opics (focusing on small and medium-sized banks) complement and integrate the business of the fund management system to strengthen the collaborative efficiency.
The company is the financial it leader in the non banking field, but the market still has poor expectations for its financial it layout in the banking field. In fact, the company has continued to focus on the new cycle of bank it boom in the past two years. It is judged that there are three main driving forces for the current banking IT industry: 1) the demand for distributed digital transformation of the banking industry, 2) the dividend of financial information and innovation policy, and 3) the demand for banking IT openness and digital middle office upgrading. With the acquisition of summit, the company is expected to further strengthen the card position and fulcrum advantages of bank fund management, a key business system, and deeply share the bank's it incremental dividend. It is worth noting that after the completion of this transaction, Yunying network can continue to obtain finastra's continuous update of the summit system source code and product iteration support. The continuity of product advantages is very strong. It is optimistic that the company's Bank IT business has made a breakthrough in two aspects: first, the business growth center is approaching the advantageous capital market it, Second, promote the optimization of the bank's it charging mode through the obtained product advantages, and replicate and promote the summit annual payment operation mode.
Continue to deepen the cooperation with finastra and accelerate the internationalization strategy
In fact, this is not the first time the company has joined hands with finastra. As early as June 2020, the company jointly launched a new version of portfolio management system fusioninvest with finastra. The two sides have customized the development of the original FusionInvest software, and provide investment management solutions including investment decision, risk management and investment valuation for buyers from mainland China and Chinese mainland, Hong Kong, Macao and Taiwan.
Considering finastra's absolute dominant position in the field of information management, the company intends to further polish O-Series and information management cloud products. For now, Cloudization (SaaS) is still the focus of the company's current business innovation, and the cloud platform operation mode is expected to gradually become a new growth engine. In recent years, the company has completed the integration of wealth cloud and asset management cloud through Yunyi network, forming an integrated service scheme for wealth asset management and institutional services. It is expected that the SaaS service revenue and asset management scale will maintain steady growth in the future, and the operation business will continue to grow Further contribute income. Considering the evolution route of asset management cloud and the operation mode (SaaS like) introduced by summit, the company is expected to gradually evolve from financial it leader to financial cloud leader.
In terms of strategic consistency, this acquisition is also the continuation of the company's extended M & A + internationalization strategy in the past three years, and it is still the first choice for European and American innovative companies / businesses. From the perspective of the three-step strategy (going out - bringing in - buying down), in view of the lack of business depth in China's financial market, in addition to learning the advanced model "bringing in" in the form of cooperation, we will directly promote the "buying down" of high-quality assets in Europe and America It is being overweight, and summit business fully meets the screening criteria of public technical advantages / channel advantages. Judging the future, high-quality European leading companies will be the first choice for M & A, and the landing is more deterministic (considering the resistance of North America).
The two wheel drive of retail and asset management is still booming, and the political reform dividend and new product iteration logic continue
Return to fundamentals. The previously released third quarterly report showed that the revenue of large retail it in the first three quarters was 1.13 billion yuan, a year-on-year increase of + 31.1%; Big asset management it realized a revenue of 1 billion yuan, a year-on-year increase of + 52.2%. In other businesses, the bank's it revenue was 180 million yuan, a year-on-year increase of - 7.4%; Data risk and infrastructure it revenue was 200 million yuan, a year-on-year increase of + 51.8%; Internet innovation business revenue was 520 million yuan, a year-on-year increase of + 30.1%.
1) Large retail it: UF3 0 product signed a new customer, new generation TA, financial management 5.0, bank comprehensive financial management 6.0 and other new customers.
2) Big asset management it: o45 products further promote the key coverage of core customers in state-owned banks, joint-stock banks and urban commercial banks, and judge that Q3 is expected to accelerate the signing process. In addition, the company's ficc business gradually forms an integrated ficc product solution by integrating fusion investment products, which is expected to form a new growth momentum.
We believe that the general trend of political reform remains unchanged in 2021, and large retail and asset management are expected to continue the two wheel drive. At present, the merger of Shenzhen main board and small and medium-sized board has been launched, and the new policy of follow-up reform is expected to form a policy relay to accelerate the outbreak of it track in the capital market. The company can provide integrated solutions for various political reforms, greatly benefiting from the reform dividend, and the subsequent performance is expected to exceed expectations. Moreover, innovative products and cloud are expected to form a new growth power in the medium and long cycle. At present, o45 iteration has entered the practice period and will gradually sign and land with public offering, private placement and other asset management institutions. It is expected that the overall business demand will continue to strengthen in 2021.
Investment suggestions:
Keep the profit forecast unchanged: it is estimated that the revenue from 2021 to 2023 will be RMB 5.56/69.8/8.85 billion respectively, with a year-on-year increase of 33.1% / 25.7% / 26.8% respectively; The net profit attributable to the parent company was RMB 1.80/2.33/3 billion respectively, with a year-on-year increase of 36.4% / 29.5% / 28.7% respectively; The corresponding EPS is 1.73/2.24/2.88 yuan respectively. On November 29, 2021, the share price was 58.32 yuan, corresponding to 47 / 37 / 28 times of PE respectively. Fundamentals reversed upward, firmly optimistic, and maintained the "buy" rating.
Risk tips:
The risk that the promotion of financial innovation policy is less than expected and the progress of innovative business is less than expected.
