\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 63 Client Service International Inc(300663) )
Event: the company issued the annual report of 2021 and the first quarterly report of 2022. In 2021, the operating income was 1.298 billion yuan, a year-on-year increase of 25.01%, the net profit attributable to the parent was 37 million yuan, a year-on-year decrease of 38.27%, and the net profit not attributable to the parent was 33 million yuan, a year-on-year decrease of 42.29%. In 2022, Q1 achieved an operating revenue of 243 million yuan, a year-on-year increase of 15.81%, and the net profit attributable to the parent company was 06 million yuan, a year-on-year increase of 4.68%, deducting the net profit not attributable to the parent company of 05 million yuan, a year-on-year decrease of 8.67%. The performance is in line with expectations.
In 2021, Xinchuang business increased significantly, and database business grew rapidly, boosting long-term profitability. 1) In 2021, China’s digital economy had a strong momentum and strong market demand. The company’s Internet banking, channel Zhongtai and domestic database and other information innovation businesses increased significantly. The annual operating revenue was 1.298 billion yuan, a year-on-year increase of 25.01%, the overall gross profit margin was 34.74%, a year-on-year decrease of 7.97pct, and the net profit attributable to the parent company was 37 million yuan, a year-on-year decrease of 38.27%. It was due to the customized development of early projects of the company’s innovative business, Moreover, the running in cycle in the process of bank digital transformation is long, resulting in high implementation cost. With the improvement of the maturity of innovative products and projects, the gross profit margin will gradually return to a reasonable range. 2) In 2021, the company’s database business ushered in rapid growth and made breakthroughs in market development. It won the bid for the supply and procurement project of database software agreement of the central state organ in 2021, realizing a revenue of 54 million yuan, a year-on-year increase of 135.74% and a gross profit margin of 83.52%. Among them, the domestic database business performed prominently, realizing a revenue of 450379 million yuan, a year-on-year increase of 358.64%, accounting for more than 80% of the database business revenue. With the promotion of domestic substitution, the proportion of database business will be further improved, and the structural improvement of gross profit will gradually appear, which is expected to boost the company’s long-term profitability.
The strength of independent research and development continued to improve, and the overall cost control was good. 1) In 2021, the company invested 147 million yuan in R & D, with a year-on-year increase of 13.07%, accounting for 11.33% of revenue. In 2021, there were 733 R & D personnel, with a year-on-year increase of 12.60%, accounting for 13.69% of the total employees. 13 invention patents and 106 software copyrights were added. By the end of 2021, the company had obtained 169 software copyrights and many patents, owned all source codes and independent intellectual property rights from basic software to application layer, and its independent R & D strength continued to improve. 2) The overall cost control of the company is good, including the sales expense rate of 5.67%, a year-on-year decrease of 1.94pct, the management expense rate of 9.43%, a year-on-year increase of 0.09pct, the R & D expense rate of 9.14%, a year-on-year decrease of 2.20pct, the financial expense rate of 3.26%, and a year-on-year decrease of 0.92pct.
In the first quarter of 2022, the revenue maintained growth and the gross profit level improved. In 2022q1, the company realized an operating revenue of 243 million yuan, a year-on-year increase of 15.81%, and the net profit attributable to the parent company was 06 million yuan, a year-on-year increase of 4.68%. The overall gross profit margin was 39.61%, with a year-on-year increase of 1.55pct. It is expected that the gross profit will be further improved with the improvement of product maturity and the decrease of project running in cost.
Huawei’s core ISV ecological partner has significant advantages in intellectual property rights and performance of domestic databases. 1) The company is Huawei’s core ISV ecological partner and continues to deepen cooperation. At present, the company has completed the development of financial security components for mobile financial transactions based on harmonyos development kit and technical support, and jointly launched the independent and controllable transformation scheme of banking business platform with Huawei. June 2021, harmony OS 2 0 officially released, Hongmeng is expected to enter a large-scale promotion period. Cooperation with Huawei will further improve the company’s trusted security application capability on the mobile terminal side. 2) According to the prediction of iResearch consulting, the scale of China’s database market will reach 50.9 billion yuan in 2025. The company has developed more than 2000 sets of business systems for more than 500 financial customers, with mature distributed transactional database business software and a complete series of bank front, middle and back office products, which has the advantage of adaptation in database replacement. In 2021, the company’s domestic database product sundb obtained a registered trademark. Compared with the previous generation product Goldilocks, it realized function expansion and architecture optimization, increased the ability required by national security and improved China’s technological ecology. It is the only domestic database product in China with complete independent intellectual property rights and complete independent control of core technology. The company’s database products have outstanding advantages in intellectual property rights and performance, and continue to obtain orders and revenue verification. It is expected to enjoy the localization dividend of the 10 billion market.
Digital RMB products have gradually matured, and the IT sector of corporate banks has ushered in incremental business. 1) At the 2022 working meeting, the central bank proposed to “steadily and orderly promote the pilot of digital RMB research and development”. By the end of 2021, there had been more than 8.0851 million pilot scenarios, 261 million personal wallets and a transaction amount of 87.565 billion yuan, covering many small and large-scale payment fields. With the pilot and scenario liberalization, industrial chain companies involving digital RMB hardware, software products or systems will benefit significantly. 2) In 2021, the company obtained the software copyright of Kelan digital wallet service platform v1.0, which can realize the service connection between financial institutions and digital RMB operators and provide digital wallet services. The digital RMB project between the company and a large state-owned bank has completed technical verification and delivered. At the same time, the company has also entered the promotion stage of stock customers of mobile banking, and has undertaken the digital RMB related system construction project of a joint-stock bank and several urban commercial banks. In the future, the IT sector of corporate banking will usher in continuous incremental business.
Maintain the “buy” rating. According to key assumptions, it is estimated that the operating revenue from 2022 to 2024 will be RMB 1.633/20.05/2.406 billion respectively, and the net profit attributable to the parent company from 2022 to 2024 will be RMB 128/1.81/253 million respectively. Maintain the “buy” rating.
Risk warning: the promotion of database business does not meet expectations; Risk of salary increase; Risk of difference between prediction assumption and actual situation.
