\u3000\u3 Shengda Resources Co.Ltd(000603) 927 Sinosoft Co.Ltd(603927) )
Event overview
The company recently released its 2021 annual report, with an annual operating revenue of 6.281 billion yuan, a year-on-year increase of 8.65%; The net profit attributable to the parent company was 577 million yuan, a year-on-year increase of 21.16%; The net profit deducted from non parent company was 554 million yuan, with a year-on-year increase of 18.73%. The revenue side of the company grew steadily in 2021, and the profit continued to grow rapidly. In the past five years, the company has achieved a compound growth rate of more than 20% in net profit, with stable overall operation and good growth.
Insurance it grew well and the comprehensive gross profit margin continued to rise
From the perspective of revenue splitting, the core insurance it business of the company achieved revenue of 3.503 billion yuan in 2021, accounting for 56% of the total revenue, with a year-on-year increase of 18.64%, which is much higher than the overall revenue growth of the company, including software business revenue of 3.43 billion yuan, accounting for 97.94%. According to the disclosure of the annual report, the company’s Insurance IT field achieved 141 customers with revenue of more than 5 million in 2021, an increase of 13 compared with 2020. By the end of 2021, the number of Chinese insurance company customers served by the company had reached 180, 87 of the 88 Chinese property insurance companies were company customers, of which 72 property insurance companies adopted the property insurance core business system independently developed by the company; Among 92 China Life Insurance Company Limited(601628) insurance companies, 90 are corporate customers, of which 75 adopt the life insurance core business system independently developed by the company. We believe that the company’s core insurance it business still maintains a good growth, and occupies a large leading advantage in the coverage of downstream customers. It is expected to benefit from the continuous improvement of insurance informatization demand, so as to support the company to continue to achieve steady growth. In terms of gross profit margin, the company’s comprehensive gross profit margin in 2021 was 29.52%, with a year-on-year increase of 1.50pct, realizing the increase of gross profit margin for four consecutive years. We believe that the increase in the company’s gross profit margin is mainly due to the increase in the proportion of the company’s software business. According to the disclosure of the company’s annual report, in 2021, the company’s system integration business decreased by 3.83% year-on-year, accounting for 20.54% of revenue, and decreased by 2.67pct year-on-year. The gross profit margin of integrated business is relatively low. The optimization of the company’s income structure promotes the improvement of the comprehensive gross profit margin. We believe that this trend is expected to continue.
The “insurance +” strategy is accelerated and the future growth curve is opened
“Insurance +” strategy promotes a new round of growth of the company. With the extension of the demand of the insurance industry, the demand for insurance informatization has gradually evolved from traditional internal management to external business synergy. Therefore, the company is expected to pay close attention to the core insurance customers and extend the informatization service to the system docking and business construction between the insurance company and various industry scenarios, so as to help the insurance customers realize higher customer value and open a new round of growth for the company.
From the perspective of development strategy, the current “insurance +” of the company mainly focuses on the key directions such as “insurance + great health”, “insurance + great transportation”, “insurance + great consumption” and “insurance + great safety”. On the one hand, with the help of the company’s competitive advantages in the insurance it field, it cuts into other fields closely related to the insurance industry and actively focuses on medical and health, social security, education, agriculture, meteorology, energy Business layout in power and other fields; On the other hand, cooperate with insurance customers to jointly explore the insurance industry, embed a variety of application scenarios through technical means, provide business opportunities for digital guarantee, assist the innovation of insurance companies’ products and services, and help the business development of insurance companies.
From the perspective of business results, according to the disclosure in the annual report, the company’s direct business income from the implementation of the “insurance +” strategy in 2021 was 634433 million yuan, with a gross profit margin of 44.55%, covering many fields such as health management, automotive aftermarket services, gas safety and medical commercial insurance, involving system construction and docking, marketing services, automatic underwriting and claim settlement. In addition, according to the disclosure of the annual report, in 2021, the company realized insurance it related revenue of 284 million yuan for insurance intermediaries, insurance technology companies, cloud infrastructure manufacturers and other industry customers, with a year-on-year increase of 88.02%. Insurance intermediaries, insurance technology companies and cloud infrastructure manufacturers play an important role in the process of embedding insurance into various application scenarios. They are also an important part of the company’s “insurance +” strategy and important partners in the company’s “insurance +” ecological construction; The company carries out insurance it software development and system construction for customers in other industries, and also lays the foundation for the subsequent implementation of “insurance +”. In the future, the rapid growth of insurance it revenue from insurance intermediaries, insurance technology companies and non insurance customers is expected to inject new vitality into the growth of the company’s insurance it business and main business. As an important business layout of the company in the direction of “insurance + transportation”, the company achieved an income of 53.19 million yuan in the field of auto finance in 2021, with a year-on-year increase of 68.59%. Its customers include the financial and technology subsidiaries of large auto enterprises such as FAW, Toyota, BAIC, Byd Company Limited(002594) and so on.
Investment advice
Sinosoft Co.Ltd(603927) as a large-scale industry application software provider controlled by Software Institute of Chinese Academy of Sciences, based on the vigorous informatization demand of the insurance industry, expand customer demand through “insurance +” strategy, open the future growth curve, and is expected to achieve long-term steady growth. We expect the company to achieve an operating revenue of RMB 7.154/8.140/9.205 billion in 2022 / 23 / 24, with a year-on-year increase of 13.9% / 13.8% / 13.1%. The net profit attributable to the parent company was 714 / 882 / 1078 million yuan, with a year-on-year increase of 23.6% / 23.6% / 22.1%. For the first time, the investment rating of Buy-A is given, and the six-month target price is 33.60 yuan, corresponding to 28 times the dynamic P / E ratio in 2022.
Risk warning: the investment in insurance informatization is less than expected; The promotion of “insurance +” strategy was less than expected.
