Hundsun Technologies Inc(600570) (600570)
Key investment points
Financial it leader, cloud promotes change: Hundsun Technologies Inc(600570) from 2008 to 2021, it was selected into fintech 100 global financial technology list for 14 consecutive years, ranking 38th in 2021. Hundsun Technologies Inc(600570) started as securities it, and then expanded to banks, funds, trusts and other fields. The business scope continued to expand, and the performance grew steadily for a long time. The compound growth rate of revenue from 2010 to 2020 was as high as 17%, and the compound growth rate of deducting non net profit was 15%. In 2018, the company formulated the cloud theme strategy of “online” and comprehensively launched the upgrading of product technology, solution and service system and innovative business. The cloud strategy will upgrade Hang Seng’s technical architecture, adjust the organizational structure, improve product competitiveness, respond to customer needs faster, and help Hang Seng’s strong and strong.
The financial IT industry is Changpo heavy snow track, Hundsun Technologies Inc(600570) fully benefited: the revenue of the financial IT market comes from the IT investment of financial institutions. 1) The demand for it in the financial industry is increasing. Business innovation, regulatory innovation and technological innovation in the financial industry bring a steady stream of it construction needs. 2) The number of participants in the capital market increased and the scale of the financial industry expanded. On the one hand, residents’ non-financial assets have turned to financial assets, of which the proportion of equity assets has been increasing; On the other hand, the number and categories of investable objects in the capital market are gradually increasing. 3) Financial IT support policies have been issued one after another, and the development of financial science and technology has risen to a national level. Driven by demand, supply and policy, We believe that the compound growth rate of revenue scale in the financial IT market (securities, funds and banks) is expected to remain above 20% from 2021 to 2025. 4) financial institutions have high stickiness to the IT system, long replacement cycle, and the first mover advantage and market share are the key. Hundsun Technologies Inc(600570) the growth rate of revenue is highly correlated with the growth of A-share trading volume, and continues to benefit from the steady development dividend of the financial industry.
Hundsun Technologies Inc(600570) with superior pattern and seeking change in stability, it is the long-distance champion of financial it track: 1) high market share brings core competitive advantage. Financial institutions have strong stickiness to it systems. The core trading system with the strongest stickiness to Hundsun Technologies Inc(600570) card customers has a high market share in many key product areas, which has brought a stable customer base and sustainable income to Hang Seng. 2) Strong bargaining power and high productization continue to improve the quality of profits. Hundsun Technologies Inc(600570) adhere to the “product” strategy, and the sales gross profit margin will be as high as 77% in 2020. Hundsun Technologies Inc(600570) the industry has strong bargaining power. In 2020, the revenue of accounts receivable accounted for only 13%, and the revenue of accounts receivable in advance accounted for 37% in 2019, ranking among the top comparable companies in the industry. 3) Direction 1: business continues to deepen. From 2011 to 2020, the R & D expense rate of Hang Seng remained above 30%, adhered to the leading technology, created a comprehensive product matrix, continued to go deep into the customer business, and provided newer and better services from the front desk to the back office. 4) Direction 2: continuous business expansion. Self research and acquisition are important means for expanding Hang Seng’s business. On the one hand, Hang Seng went out of the equity market and advanced into new fields such as banking and insurance; On the other hand, Hang Seng adheres to the “internationalization” strategy, introduces foreign advanced products and business models, develops the international market and buys the products of international leading manufacturers.
Profit forecast and investment rating: the financial it track has a long slope and thick snow, and the pattern is stable; Hundsun Technologies Inc(600570) has a high market share. Its products have wide recognition and customer stickiness. At the same time, it continues to strengthen its competitiveness by deepening and expanding its business. Accordingly, we estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.625/2.551 billion, corresponding to 56 / 45 / 36 times PE. On December 20, 2021, the total market value / net profit deducted from non parent company and P / OCF valuation were in the 40% / 55% quantile from 2016 to 2020 respectively, at a relatively low historical position, with sufficient margin of safety and broad growth space, maintaining the “buy” rating.
Risk tips: 1) the progress of Beijing stock exchange is not as expected; 2) The promotion of new generation products is not as expected; 3) The business expansion in the banking and insurance fields was less than expected.
