Hundsun Technologies Inc(600570) (600570)
Event: on November 26, Hundsun Technologies Inc(600570) holding subsidiary Yunying network was the product line of supplementary fund management system, $65 million (about RMB 421.551 million) acquire summit’s business in China, Hong Kong and Macao, undertake 17 customers and ongoing contracts, and have the right to carry out localization development based on summit product source code. At the same time, the company increased capital of RMB 630 million to Yunying network to help Yunying network buy summit business, acquire 76.01% equity of Hang Seng Lirong, and make up for it Replenish working capital.
comment:
1. The fund management system is one of the core systems of the bank, and summit has outstanding competitive advantages. Fund management system is an important business department of bank The core system used by (such as the financial market department) involves highly complex mathematical models, which are difficult for Chinese manufacturers and banks to develop by themselves and rely heavily on foreign manufacturers. The summit system acquired this time is the world’s leading fund management system, with advantages including advanced pricing model, continuous delivery mode, cross asset, front, middle and back office, cloud technology route, etc State owned assets system manufacturers include time Yintong, Zhonghui Yida, Kaike Weizhi, Zhaoyin technology, Hengtai software, etc. there is a large gap between products and summit. Through subsequent digestive system and localization transformation, Hang Seng can finally form a capital business solution with more advanced technology, more suitable for Chinese customers and more in line with international standards.
2. Summit + opics, the fund management system of large, medium and small banks is fully covered, the synergy effect is obvious, and the space continues to open. Summit is a fund management system solution for large and medium-sized banks; In May this year, the company acquired Hang Seng Lirong. Its current main product is opics fund management system covering small and medium-sized banks. In order to fully cover large, medium and small bank customers and form synergy, Yunying network also plans to eliminate internal competition and share and integrate the company’s assets, business, personnel, finance and other resources by acquiring 76.01% equity of Hang Seng Lirong.
3. Excellent business model and high quality of existing customers. Different from other bank IT companies, summit system focuses on product license fee income and implementation income, and the product license fee is charged every year, so the business model is more excellent. Due to the long contract period signed with customers, simmit business is expected to contribute stable cash flow and profits in the future. With the company’s digestion, absorption and localization of the system and the gradual replacement of finastra’s original team by the Chinese team, the company expects the EBIT / operating revenue to increase from 21.2% in 2022 to 30.1% in 2027 and beyond. The company has undertaken 17 customers of summit in China, Hong Kong and Macao, including Agricultural Bank Of China Limited(601288) , Shanghai Pudong Development Bank Co.Ltd(600000) , Bank Of Ningbo Co.Ltd(002142) , Bank Of Jiangsu Co.Ltd(600919) . The range of high-quality customers is expected to be further expanded in the future.
Considering the positive impact of the acquisition of summit and referring to the profit expectation of summit business, we adjusted the company’s revenue forecast from 5.319/67.54/8502 billion yuan to 5.417/68.65/8622 billion yuan from 2021 to 2023, and the net profit forecast from 14.11/17.53/2181 million yuan to 14.31/17.78/2204 million yuan, corresponding to 58.4/47.0/37.9 times PE, maintaining the “buy” rating.
Risk tips: 1) customer transfer and renewal risk; 2) Internal integration risk; 3) Risk of increased competition; 4) Goodwill impairment risk
