\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 570 Hundsun Technologies Inc(600570) )
Event: on April 27, 2022, Hundsun Technologies Inc(600570) released the first quarterly report of 2022. The company achieved an operating revenue of 973 million yuan, with a year-on-year increase of 29.59%, a net profit attributable to the parent company of – 41 million yuan, with a year-on-year decrease of 124.49%, and a net profit not attributable to the parent company of 15 million yuan, with a year-on-year decrease of 59.13%. The performance is in line with market expectations.
Key investment points
Short term factors such as the growth of personnel compensation expenses and the epidemic have put pressure on Performance: in the first quarter of 2022, the company’s net profit deducted from non parent companies decreased by 59.13% year-on-year, mainly because the company’s personnel increased significantly by 37% in 2021, and the personnel costs are relatively rigid. However, the revenue side is affected by a certain epidemic, and the delivery has slowed down. In the first quarter of 2022, the company’s R & D expense rate was 51.58% (+ 1.98pct, year-on-year, the same below), the sales expense rate was 10.20% (+ 1.23pct), the management expense rate was 13.39% (- 0.4pct), and the overall gross profit margin was 70.36% (- 2.63pct). We believe that the decrease in net profit of non parent company deduction caused by the increase of personnel and the impact of the epidemic is temporary. The increase of personnel is to prepare for the subsequent rapid development of the company. With the improvement of the epidemic and the recovery of revenue growth, the profitability of the company will be improved.
The new management took office, the business segments were re divided, and the strategy was clearer: on April 16, 2022, the company announced the election of new management, providing better organizational guarantee and strong driving force for the company’s development in the new era of digital intelligence finance. In the first quarterly report of 2022, the Company re divided its business segments, transferred TA related product lines and insurance core IT business from the original large retail IT business to large asset management IT business and enterprise finance, insurance core and infrastructure IT business respectively, and made corresponding integration within each business. Through this adjustment, the company’s large retail it and large asset management it focus more on standardized products, enterprise finance, insurance core and infrastructure IT business provide customers with more personalized services, and data risk and platform technology focus on emerging businesses such as big data. The company’s strategy will be clearer and build a “high-speed rail model” for digital intelligence finance 2030.
The financial industry continues to innovate and change, and Hang Seng’s long-term logic remains firm: on April 26, 2022, the CSRC issued the opinions on accelerating the high-quality development of the public fund industry, which clearly proposed to expand the team of public fund managers and actively promote the establishment of fund management companies by high-quality financial institutions such as commercial banks, insurance institutions and securities companies according to law; Focus on improving the core competence of investment and research; Continuously strengthen compliance risk control capability; Actively encourage products and business integrity and innovation. Based on this, the number of customers and the product value of individual customers in the fund and securities it industries are expected to increase. Hundsun Technologies Inc(600570) as an industry leader, is expected to benefit from the reform and innovation of the financial industry for a long time.
Profit forecast and investment rating: China’s financial industry will continue to change, innovate and flourish in the future, bringing a large number of it construction needs, Hundsun Technologies Inc(600570) leading technology, new strategic positioning and moving towards digital intelligence finance. Despite the impact of short-term factors such as the epidemic, we are optimistic about the long-term growth value of the company, maintain the prediction of net profit attributable to the parent company from 2022 to 2024 at RMB 1.697/19.53/2.238 billion, and maintain the “buy” rating.
Risk warning: policy promotion is not as expected; Risk of aggravation of the epidemic; The progress of product research and development is less than expected.
