\u3000\u30 Shenzhen Fountain Corporation(000005) 55 Digital China Information Service Company Ltd(000555) )
Event overview
On March 30, 2022, the company released its 2021 annual report. The annual contract amount reached a new high, reaching 11.997 billion yuan, a year-on-year increase of 4.88%, and the operating revenue reached 11.356 billion yuan, a year-on-year increase of 6.27%. In 2021, the net profit attributable to the parent company was 376 million yuan, and the net profit deducted from non attributable to the parent company was 315 million yuan, with a year-on-year increase of 46.14%. The company achieved sound growth in annual performance.
The strategy focuses on financial technology, and financial soft services grow rapidly
From the perspective of revenue structure, the company mainly focuses on three business lines, among which the financial technology business achieved an operating revenue of RMB 5.022 billion in 2021, with a year-on-year increase of 16.81%. The revenue of government and enterprise business was 3.732 billion yuan, a year-on-year increase of 5.87%. The business income of operators was 2.307 billion yuan, a year-on-year decrease of 7.11%. From the perspective of income structure, the development achievements of the company’s strategy focusing on financial technology are gradually emerging.
From the perspective of business model, the company’s software development and technical services realized a revenue of 5.317 billion yuan in 2021, with a year-on-year increase of 15.63%, of which the soft service revenue of financial technology sector was 2.52 billion yuan, with a year-on-year increase of 26.70%. The company’s system integration business realized a revenue of RMB 6.033 billion in 2021, a year-on-year decrease of 0.80%. From the perspective of business model, the company is gradually transforming from system integration business to software development and technical service business with higher gross profit. We believe that this is expected to optimize the company’s business structure and realize the long-term increase of gross profit margin.
The layout of financial products and solutions is perfect, and Xinchuang business is ready to go
From the perspective of products, in 2021, the company released ModelB@nk 5.0 banking architecture guidelines, launched a full stack technology independent and controllable digital security platform Shenzhou Xinchuang cloud based on cloud native and other digital technologies. At present, the company has formed a product and solution matrix of “eight solutions + consulting services”, covering the core applications of banks, cloud computing, data intelligence, smart banking, open finance, mobile Internet, risk management and technology supervision.
From the perspective of customers, according to the disclosure of the company’s annual report, the company signed the second phase of Postal Savings Bank Of China Co.Ltd(601658) overall control project for the new generation core system in 2021; Continuously participate in the construction of distributed platform of Bank Of China Limited(601988) ; Signed the core system construction projects of 13 banks including Guangdong Development Bank, Bank Of Beijing Co.Ltd(601169) , Bank of Jilin and so on. 15 new customers of enterprise level micro service platform and enterprise service bus (ESB) have been expanded, 11 existing customers have been upgraded, and China Everbright Bank Company Limited Co.Ltd(601818) , Hua Xia Bank Co.Limited(600015) Credit Card Center, Bank Of Shanghai Co.Ltd(601229) , Bank of Jilin, Gansu rural credit, etc. Digital finance business has signed contracts with dozens of customers, including Ping An Bank Co.Ltd(000001) , China Everbright Bank Company Limited Co.Ltd(601818) , Industrial Bank Co.Ltd(601166) , etc. The data intelligence product family won the bid for more than 20 bank customers including Postal Savings Bank Of China Co.Ltd(601658) , Industrial Bank Co.Ltd(601166) , Bank Of Nanjing Co.Ltd(601009) ; Risk management product family won the bid, signed the contract China Citic Bank Corporation Limited(601998) , Guangdong Development Bank, China Everbright Bank Company Limited Co.Ltd(601818) , Dongguan bank and other customers.
From the perspective of credit innovation business, according to the disclosure of the company’s annual report, the company’s financial credit innovation business signed 840 million yuan in 2021, and more than 20 benchmark cases of financial credit innovation industry such as regulators, policy banks, large state-owned banks and joint-stock banks were added. Participated in the information and innovation planning consultation of more than 20 pilot financial institutions such as banks, insurance and securities. We believe that the industry’s credit innovation is expected to enter the stage of rapid development, and the credit innovation work in banking and other financial fields will be greatly promoted, which will also become the key direction of the company’s business expansion and support performance growth.
Large scale application of scenario finance and landing construction of digital RMB
In addition to the products and solutions for banks and the promotion of financial information and innovation business, the company is also actively expanding its financial technology scenario business. In 2021, it will achieve large-scale application results in three directions:
1) three rural scenarios: according to the disclosure of the annual report, in 2021, the company signed 282 million yuan of bank agriculture direct link business, with a year-on-year increase of 46.39%. The newly signed projects covered more than 300 districts and counties in 28 provinces. A total of 64.02 million yuan has been signed for the three rural big data business, and 23 agricultural single product big data platforms have been built, including 8 National single product big data platforms and 15 regional single product big data platforms, including key Shenzhen Agricultural Products Group Co.Ltd(000061) such as apple and tea, which have opened up the key links of the whole industrial chain of agricultural single products;
2) SME scenario: Based on the original direct connection between bank and tax, the company has independently developed the “credit integration service platform”, providing integrated solutions for customer acquisition, data, enterprise standards, intelligent risk control and external credit enhancement, helping banks, enterprise credit investigation companies and loan companies to improve the credit portrait of SMEs and build an assessment system for SMEs. The company participated in the implementation of bank tax scenarios of more than 20 financial institutions such as Postal Savings Bank Of China Co.Ltd(601658) , Shanghai Pudong Development Bank Co.Ltd(600000) , Guangdong Development Bank and so on.
3) application scenario of digital RMB: according to the disclosure of the annual report, the company’s digital RMB solution has been implemented in nearly 20 banks including China Construction Bank Corporation(601939) , Guangdong Development Bank and Bank Of Beijing Co.Ltd(601169) in 2021, helping Beijing Dongcheng District Taxation Bureau successfully realize the city’s first digital RMB payment of entrusted tax collection business. We believe that the pilot scenario and the number of users of digital RMB are growing rapidly. Combined with the recent central bank’s relevant policies on digital RMB, 2022 is expected to become an important year for the further large-scale application of digital RMB. The company has achieved large-scale construction in digital RMB business and is expected to benefit from the growth on the demand side.
Investment advice
Digital China Information Service Company Ltd(000555) has more than 30 years of experience in providing scientific and technological services to financial institutions. At present, it continues to focus on financial technology strategy and has perfect financial products and solutions. Driven by the upgrading of bank it system architecture, the continuous promotion of financial information innovation and the application of scenario financial scale represented by digital RMB, it is expected to achieve long-term steady growth of business. We expect the company to achieve operating revenue of RMB 12.545139.57/15.639 billion in 2022 / 23 / 24, with a year-on-year increase of 10.5% / 11.3% / 12.0%. The net profit attributable to the parent company was 452 / 550 / 674 million yuan, with a year-on-year increase of 20.2% / 21.6% / 22.6%. For the first time, the investment rating of Buy-A is given, and the six-month target price is 16.08 yuan, which is equivalent to 35 times the dynamic P / E ratio in 2022.
Risk warning: the research and development of core technology is not as expected; The demand of the financial industry was lower than expected.
