Hundsun Technologies Inc(600570) (600570)
It plans to acquire summit business and maintain the “buy” rating
The company plans to acquire summit’s business in China for 420 million yuan to supplement the capital market product line. We keep the profit forecast unchanged. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.583 billion, RMB 1.957 billion and RMB 2.314 billion respectively, and EPS will be RMB 108, 1.34 and 1.58 per share. The PE corresponding to the current share price from 2021 to 2023 will be 52.8, 42.7 and 36.1 times, maintaining the “buy” rating.
Event: Yunying network, the holding subsidiary of the company, acquired summit business of finastra company
Yunying network, the holding subsidiary of the company, signed an agreement with finastra to acquire finastra’s summit China business for 420 million yuan. The company will obtain the exclusive right, permanent use right and permanent update service in China, Hong Kong and Macao, and have the right to carry out localization development on the basis of source code; Finastra will receive 40% of the revenue from the product license fee (excluding the product implementation revenue). After the acquisition, the company will form a goodwill of about 356 million yuan. In addition, the company plans to increase the capital of Yunying network by 630 million yuan, and the shareholding ratio will increase from 60% to 98.28%.
Target: summit is the world’s leading fund management system
Finastra is a UK based financial IT company with revenue of US $1.9 billion in fy2020. Summit is the world’s leading fund management system for positions, transaction processing and risk management. At present, it has 17 large and medium-sized bank customers in China. In fiscal year 2021, summit’s revenue in China, Hong Kong and Macao was 94.25 million yuan, including 48.43 million yuan of product license revenue and 45.82 million yuan of implementation revenue.
Significance of acquisition: supplement the capital market product line and quickly enhance the market competitive advantage
(1) The fund management system is one of the core systems of the bank. Due to the complex mathematical model and high professional and technical barriers, it is difficult for Chinese manufacturers and banks to study by themselves. At present, they rely heavily on overseas manufacturers. (2) The company’s own opics fund management system mainly covers small and medium-sized bank customers. After the acquisition, the company will undertake summit’s original 17 large and medium-sized bank customers and ongoing contracts, and integrate with opics system to form synergy. (3) In the short term, the company can quickly enter the field of large and medium-sized banks by inheriting customers, supplement the capital market product line and expand market share; in the long term, the company will digest, absorb and localize the summit system, which is expected to fill the technical gap with overseas manufacturers and enhance its competitive advantage.
Risk warning: customer contract transfer and renewal risk; Internal business integration risk.
