\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 74 Yusys Technologies Co.Ltd(300674) )
Key investment points
Bank Of China Limited(601988) it leading enterprise, with steady growth in performance
Founded in 1999, the company’s main business is to provide consulting and planning, software development, operation and maintenance, system integration and other scientific and technological services to financial institutions and non bank financial institutions dominated by banks. For more than 20 years, the company’s product line has comprehensively covered business, channels and management, and has advantages in major product lines such as credit, data, channels and supervision. According to the IDC report, the company has been ranked first among IT solution suppliers in Bank Of China Limited(601988) industry for many consecutive years since 2010, and is one of the leaders in China’s largest financial technology solution market. The growth of the company’s performance is relatively stable. The revenue increased from RMB 1.623 billion in 2016 to RMB 2.982 billion in 2020, with CAGR of 1.66 billion 43%, and the attributable net profit increased correspondingly from 177 million yuan to 453 million yuan, cagr26 48%。 The 2021 performance forecast realized the attributable net profit of 382397 million yuan, a year-on-year decrease of 15.65% – 12.34%. The attributable net profit after deducting non recurring profits and losses and excluding equity payment expenses was 460475 million yuan, a year-on-year increase of 19.6-23.5%, and the performance maintained a steady growth.
The layout of financial information and innovation is comprehensive, and benchmark cases continue to be implemented
Software development, service and system integration are the company’s traditional businesses. Benefiting from the accelerated promotion of Xinchuang in the financial industry and the comprehensive development of bank digital transformation, the company’s traditional businesses still maintain steady growth. According to the data of IDC, the market scale of IT solutions in Bank Of China Limited(601988) industry in 2020 was 50.24 billion yuan, which is expected to reach 118.56 billion yuan in 2025. The average annual compound growth rate in the next few years will be 18.73%. The industry will still maintain rapid growth. As a leader in the industry, the company will fully benefit.
Through years of investment, the company’s technology and products are independently controllable. It has been deeply integrated with the products of Huawei, Tencent and other partners, completed the adaptation certification from the underlying domestic chip server, domestic database to the cloud platform, and began to cooperate in the implementation of projects of multiple customers. At present, the information innovation projects participated by the company cover from OA enterprise management and self-service terminal scenarios to general business scenarios such as marketing management, risk control and compliance, data middle office and credit middle office, and then to key scenarios such as payment and clearing and core downward movement. With the launch of the benchmark case of Xinchuang, the company is expected to fully benefit from the outbreak of financial Xinchuang and drive the growth of the company’s revenue.
Overseas business has made breakthroughs and opened the development ceiling
In 2021, the digital banking platform project operated by the company in cooperation with a multinational bank and an Indonesian group company has been officially put into operation, and the operation transaction volume has increased steadily; Singapore Yuxin signed a contract with a Chinese state-owned bank to provide it with a regulatory statement submission platform system. The project has been put into trial operation. In addition, through remote delivery, the company successfully completed the transformation POC of a Singapore bank outlet. At the same time, many other projects in Southeast Asia are also being actively promoted, and continue to integrate resources with Huawei, nttdata, overseas Chinese Bank of Singapore and other partners to export the company’s advanced products and services accumulated in the Chinese market to the Southeast Asian market. In the next five years, overseas business is expected to become a new driving force for the company’s development and open up the space for the company’s long-term development.
Profit forecast
We are optimistic about the continuous improvement of the company’s profitability driven by innovative business and financial information innovation. It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be 388, 559 and 747 million yuan respectively, and the EPS will be 0.59, 0.79 and 1.05 yuan respectively. The current share price corresponds to 38, 28 and 21 times of PE respectively. It is covered for the first time and given a “recommended” investment rating.
Risk tips
Cyclical fluctuation risk of bank IT investment; The risk that innovation and overseas business expansion are not as expected; The risk of intensified market competition; The risk of repeated outbreaks; Macroeconomic downside risks.
