Hundsun Technologies Inc(600570) (600570)
1、 Event overview
Hundsun Technologies Inc(600570) issued an announcement on the evening of November 26 to increase the capital of its subsidiary Yunying network by 630 million yuan. Among them, 420 million yuan was used to acquire summit business of finastra company and obtain overseas leading IT system solutions for bank capital transactions.
2、 Analysis and judgment
Acquire summit business and absorb overseas leading bank IT technology and industry understanding
Summit focuses on bank fund management business, and its leadership lies in industry understanding. Hang Seng spent about 420 million to acquire summit business from finastra, an overseas financial IT company, It mainly focuses on bank fund management and trading system The core barrier of the bank’s gold market system is industry understanding, especially the difficult mathematical models. The highly specialized gold market system is mainly provided by foreign IT manufacturers, and Summit has already taken orders from 17 large and medium-sized banks in mainland China and Hong Kong, Macao and Taiwan, and is a major supplier in the Chinese mainland market.
How about the new business model? Summit’s revenue model is similar to suite software. The revenue is mainly composed of license fee and implementation fee, with a ratio of nearly 1:1. After the first year of implementation, the license fee will be collected from customers every year, which is an excellent business model for class subscription. According to the acquisition agreement, the company will pay 40% of the license fee to finastra for subsequent R & D and upgrading of products, and the relevant implementation teams will absorb and fully carry out localization transformation.
What is the expected incremental contribution to the company? According to the calculation of the company, it is estimated that the business will contribute revenue of 96 million yuan and EBIT of 20 million yuan in 22 years, and the business revenue will maintain a compound growth rate of 13% in 22-26 years. This acquisition will help Hang Seng learn advanced foreign financial IT technology and industry understanding, and fully cooperate with the original opics for small and medium-sized customers.
The “Introduction” strategy has taken another important step, and M & A will become an important starting point in the future
In the foreseeable future, China’s financial industry will continue to expand its opening to the outside world and integrate with the international financial market. The acquisition of summit business is another milestone of Hang Seng’s “Introduction” strategy. The company hopes to acquire overseas advanced financial IT technology through acquisition, especially in combination with the business understanding of overseas mature financial markets, and help Hang Seng seize the major opportunity of the next round of financial reform and consolidate its leading advantage through acquisition, localization and transformation.
3、 Investment advice
It is estimated that the company will achieve a revenue of 5.33/66.2/8.08 billion yuan in 21-23 years and a net profit attributable to the parent company of 1.59/20.0/2.48 billion yuan in 21-23 years. The current market value corresponds to 52 / 42 / 34 times of PE in 21-23 years. At present, under the unanimous expectation of wind, the corresponding PE of the securities it industry in 21 years is 44 times. As the leader in the industry market share, the company is expected to enjoy the valuation premium. Compared with its average PE (TTM) of the past three years, there is still room for the current valuation. Therefore, it maintains the “recommended” rating.
4、 Risk tips
The progress of capital market reform is less than expected; The gross profit margin decreased due to the intensification of industry competition; The progress of promoting new products is less than expected
