\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 570 Hundsun Technologies Inc(600570) )
Event: the company’s q122 revenue was 973 million yuan, a year-on-year increase of + 29.6%, the net profit attributable to the parent company was -41 million yuan, a year-on-year increase of – 124.5%, and the gross profit margin was 70.4%, a year-on-year increase of – 1.9pct. The year-on-year growth rate of segment revenue: large retail it + 35.8%, large asset management it + 35.9%, enterprise finance, insurance core and infrastructure it + 19.3%, data risk and platform technology it + 74.0%, Internet innovation business + 16.4%, and non-financial business – 30.8%.
Performance attribution: [good growth of core business] benefited from the demand growth of securities companies and asset management institutions, and the growth of financial IT business is considerable. [net investment income & significant decline in fair value] q122 net investment income + profit and loss from changes in fair value totaled -71 million yuan, a year-on-year increase of – 159.3%. According to the company’s 2021 annual report, the company’s trading financial asset structure is as follows: equity assets account for 1.2%, bank financial management and fund trust account for 98.8%, q122 capital market fluctuations, poor or even loss of bank financial management and other products, which has a great impact on the company’s investment income. [the operating cost rate and expense rate are basically stable] the operating cost rate is 28.2%, year-on-year + 0.5pct, the sales expense rate is 9.7%, year-on-year + 0.7pct, the management expense rate is 12.7%, year-on-year -1.1pct, and the R & D expense rate is 49.0%, year-on-year -0.5pct.
Stable leading position and broad market space: in the short term, the company benefits from the introduction of new policies, new products and new licenses in the financial industry, as well as the upgrading and transformation needs of existing systems; In the long run, the development of the capital market is still worth looking forward to, and the institutionalization process is advancing steadily. The company’s products cover the whole financial industry chain. Cooperating with more than 80% of financial institutions, the company has outstanding technical advantages and brand value. As a “shovel seller” in the capital market, it will continue to benefit.
Investment suggestion: considering that the return on investment has a great impact on the company’s short-term performance, and there are still many uncertainties in the current capital market, we lowered the assumption of return on investment, and based on this, we lowered the profit forecast for 202224 by 7.3%, 9.1% and 9.6%. At present, the company’s PS (TTM) is 8.52x, which is at an absolute low level in recent five years. We are optimistic about the development of Hundsun Technologies Inc(600570) financial IT industry and maintain the “Buy-A” rating.
Risk tip: the IT expenditure of financial institutions is lower than expected, the fluctuation of capital market intensifies, the horizontal competition intensifies, etc.
