Yusys Technologies Co.Ltd(300674) 2021 annual report comments: steady growth of software business and rapid development of innovation business

\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 74 Yusys Technologies Co.Ltd(300674) )

Event:

The company issued the 2021 annual report after the closing on March 30, 2022.

Comments:

The operating revenue increased by 24.97% year-on-year, and the innovative business achieved rapid development

In 2021, the company achieved an operating revenue of 3.726 billion yuan, a year-on-year increase of 24.97%. 1) Software development and services: the revenue was 2.86 billion yuan, a year-on-year increase of 28.16%. Among them, the income from large state-owned commercial banks increased by 33.42% year-on-year. By the end of 2021, the number of orders on hand of the company’s software development business had increased by 26% year-on-year. 2) Innovative operation business: the revenue was 164 million yuan, with a year-on-year increase of 46.49%, mainly due to the continued healthy growth of digital retail business in the financial industry. 3) System integration sales and services: the revenue was 700 million yuan, a year-on-year increase of 16.61%. At the same time of business development, the company continues to integrate resources with many partners such as Huawei, Tencent, nttdata and overseas Chinese Bank of Singapore to export the advanced products and services accumulated by the company in the Chinese market to the Southeast Asian market.

The net profit excluding non parent company increased by 22.53% year-on-year, and the R & D investment ensured the core competitiveness

In 2021, the company realized a net profit attributable to the parent company of 396 million yuan, a year-on-year decrease of 12.60%, mainly due to the higher non recurring income such as the income from the disposal of associated enterprises in the previous year. The net profit deducted from non parent company was 362 million yuan, with a year-on-year increase of 22.53%. Focusing on the two capabilities of Xinchuang and cloud native, the company increased the R & D of technology platforms and tools, and participated in the technical verification and pilot project implementation of more than 20 subdivided Xinchuang scenarios. The R & D cost was 435 million yuan, a year-on-year increase of 38.72%, and the R & D cost rate was 11.67%. At the beginning of 2022, the company completed the refinancing of RMB 1.115 billion and will continue to invest in product and technology research and development.

Investing in Indonesia’s Internet life service platform is conducive to the business development of the Southeast Asian market

The company issued the announcement on foreign investment and related party transactions of wholly-owned subsidiaries on March 30. In order to promote the company’s business expansion in Southeast Asia, yusysfintech (HK) Limited, a wholly-owned subsidiary of the company, plans to invest in ptaplikasikasikaryaanakbangsa (goto) with its own funds and Mr. Hong Weidong, the actual controller of the company. Among them, Yuxin Hong Kong contributed US $3.15 million and Mr. Hong Weidong contributed US $420000. Goto, formerly known as go-jek, is the largest super Internet platform in Indonesia. In May 2021, go-jek merged with tokopedia, the local head e-commerce platform in Indonesia, and changed its name to goto, becoming the only comprehensive Internet life service platform in the Indonesian market, covering travel, takeout, e-commerce and other businesses. This investment conforms to the company’s strategic development direction, promotes the benign complementarity of the company’s business layout and capital operation, and is conducive to promoting the company’s business development and maturity in the Southeast Asian market.

Profit forecast and investment suggestions

With the deep integration of Finance and science and technology, Xinchuang continues to promote in the financial industry, and the banking industry is expected to continue to increase it investment. With the position of industry leader, the company is expected to fully benefit from the new business cycle. It is predicted that the operating revenue of the company from 2022 to 2024 will be 4.635 billion yuan, 5.658 billion yuan and 6.803 billion yuan, the net profit attributable to the parent company will be 533 million yuan, 699 million yuan and 900 million yuan, the EPS will be 0.75, 0.98 and 1.26 yuan / share, and the corresponding PE will be 24.52, 18.70 and 14.53 times. At present, the pettm of the computer (Shenwan) index is 44.2 times. In the past three years, the company’s PE has mainly operated in the range of 25-75 times. It is expected that the net profit attributable to the parent company in the next three years will be 31.48%, maintaining the company’s target PE of 40 times in 2022, with the corresponding target price of 30.00 yuan. Maintain the “buy” rating.

Risk tips

Covid-19 recurrent pneumonia; It investment in banking industry is less than expected; The business expansion of Xinchuang is less than expected; The promotion of innovative operation business is less than expected; Overseas business promotion is less than expected; Market competition intensifies.

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