Airong software (830799)
Company event: the company announced that the company plans to acquire 100% equity of Shanghai Shiyang Software Co., Ltd. with RMB 130 million. After the acquisition, Shiyang software will become a wholly-owned subsidiary of the company.
This acquisition can strengthen market integration and optimize the customer structure of the company’s main business: Airong software has gradually become the software supplier of China’s major large commercial banks. At present, it has established cooperative relations with more than half of the 19 systemically important banks in China and participated in the system construction of key commercial applications of dozens of commercial banks. Ziyang software has more than 5 years of project development experience in China’s large banking insurance companies and financial subsidiaries. This acquisition is conducive to further expanding the scale of Chinese head customers served by the company, filling the company’s deficiencies in diversified key customers, establishing the company’s market position as an important supplier of “three of the five lines”, and helping the company enter the business fields of subsidiaries such as head customer insurance and financial management, and optimizing the company’s customer structure.
The acquisition strengthens business integration, deepens and refines its main businesses: the advantageous business capabilities of Ziyang software are mainly concentrated in the bank’s back-end business and management system, mainly including the implementation capability of bank’s comprehensive risk control business software, the governance capability of regulatory submission data, the implementation capability of human resources software, the implementation capability of financial market trading products Marketing planning based on big data artificial intelligence, product implementation capability, etc. the business capability basically covers all background management systems of the bank, forming a good complementarity with the existing main businesses of Airong software. It is conducive to further enrich and improve the application product matrix, realize the front and back office business integration, and improve the systematicness, extensibility and coverage of the company’s overall service solutions for existing customers.
Expand the capacity scale + enhance the company’s profitability, and the acquisition of PE is 10x, which is expected to increase the performance: the acquisition of PE is 10x. If the successful acquisition of Ziyang software, the capacity scale of Airong will increase rapidly by about 20%. In addition, the acquisition target also made a performance commitment that the adjusted net profit in 2021 will not be less than 13 million yuan; The accumulated adjusted net profit from 2021 to 2022 shall not be less than 28.6 million yuan; The accumulated adjusted net profit from 2021 to 2023 shall not be less than 47.32 million yuan. Overall, the lower limit of profit from 2022 to 2023 has reached 33% and 39% of the profit of listed companies of RMB 47.5491 million in 2020. If it is realized, it is expected to significantly increase the performance of listed companies.
Investment suggestion: the company provides financial institutions with more comprehensive overall solutions from product platform construction to basic service support, and then to business operation support. The customers are mainly large banks, and conduct extensive cooperation with new and old customers on the basis of new Internet financial application innovation. On the whole, the company expanded to the automotive IT industry based on the banking IT industry. In addition, the assessment objective of the company’s equity incentive is that the revenue in 2021 is not less than 350 million yuan or the net profit in 2021 is not less than 55 million yuan. The cumulative operating income value in the two years from 2021 to 2022 shall not be less than 750 million yuan or the cumulative net profit value in the two years from 2021 to 2022 shall not be less than 120 million yuan. As of the latest, the market value of the company is RMB 2.3 billion, corresponding to PE (TTM) 41x. However, considering the epitaxial growth of the company’s acquisition, the dynamic PE is expected to drop to 27x in 2022. It is recommended to continue to pay attention.
Risk tips: technical iteration risk, risk of significant dependence on major customers, etc
