Yusys Technologies Co.Ltd(300674)
Event: the company issued]2021 annual report, realizing an operating revenue of 3.73 billion yuan, with a year-on-year increase of 25.0%; The net profit attributable to the parent company was 400 million yuan, a year-on-year decrease of 12.6%, mainly due to the impact of higher non recurring profits and losses caused by the disposal of associated enterprises. During the reporting period, the net profit attributable to the parent company after deducting non recurring profits and losses and excluding the impact of share based payment expenses was 470 million yuan, an increase of 22.0% over the same period of last year. The company’s revenue continues to grow steadily, and the operation and management efficiency continues to improve. The release of future profits is worth looking forward to.
Rising demand superimposed product iteration, and traditional business grew steadily. During the reporting period, with the increase of bank it endogenous demand and the vigorous development of the company’s product line, the software development and service business achieved rapid growth, with a revenue of 2.86 billion yuan in 2021, a year-on-year increase of 28.2%. 1) Demand side: large state-owned banks and joint-stock banks actively promoted the development of financial information innovation, and the demand increased significantly. The company’s software development and service revenue from large state-owned commercial banks and joint-stock banks increased by 33.4% and 28.4% year-on-year respectively. 2) Product side: the data product family has the foundation of all information innovation, and the market territory continues to expand; The credit product line launched a new generation of distributed comprehensive credit management product V5, reconstructed the operation process of credit practitioners, and doubled the number of contract orders; Supervise the product system, keep the market share first, and the products continue to iterate; The channel product system continues to innovate, providing banks with a full range of products from channel services to digital operation. The product has prominent competitive advantages, which has effectively promoted the rapid development of the company’s software business. During the reporting period, the number of hand orders increased by 26% year-on-year.
Innovative operation, rapid growth of business and building a new growth pole of the company. Innovative operation business is the new direction of the company’s future operation and development, maintaining a high-speed growth trend. In 2021, the revenue reached 160 million yuan, with a year-on-year increase of 46.5%, and the revenue CAGR from 2019 to 2021 reached 47.1%. 1) In terms of financial ecological platform, the company continued to make efforts, added two new customers and successfully put into trial operation. 2) In terms of digital credit, it has been extended to small, medium-sized and micro enterprises, and its business scope has continued to expand. 3) In terms of digital marketing operation, we realized the effective integration of financial technology and marketing operation, signed three new bank customers and ushered in business growth. 4) In terms of financial cloud services, we continued to promote in-depth integration with Baidu, upgraded Yuxin financial cloud based on Baidu cloud platform technology, and signed two new consumer finance companies and two insurance companies, which will become an important part of the company’s future transformation.
The overseas market continues to deepen, with both tradition and innovation. 1) In terms of traditional business, it has made smooth progress in Singapore, Indonesia, Malaysia and Cambodia, and network transformation products, channel products, data products and Devops products have obtained the opportunity of pilot landing in overseas markets. 2) In terms of innovative business: two innovative operation businesses in Indonesia are advancing smoothly, and the second project is expected to be launched in the first quarter of 2022. The successful implementation of the two projects fully proves the overseas market potential of the company’s innovative operation business. 3) Deepen cooperation with ecological partners in overseas markets: continue to integrate resources with Huawei, Tencent, 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.
Profit forecast and investment suggestions. It is estimated that the compound growth rate of the company’s net profit attributable to the parent company will reach 33.0% from 2022 to 2024. Financial technology related policies continue to attract the comprehensive promotion of superimposed digital RMB, bank IT investment is expected to continue to increase, and the corresponding software development demand is increasing. The company has been deeply engaged in the field of bank IT solutions for many years, with stable customer resources, rich product lines and high degree of specialization. Subsequent orders are expected to remain full, and the profit elasticity is worth looking forward to. Therefore, the company is given 33 times PE in 2022, corresponding to the target price of 24.42 yuan, and the “buy” rating is given for the first time.
Risk warning: the bank’s IT investment is less than expected; The promotion of innovative business is less than expected; Intensified industry competition, etc.
