\u3000\u30 Shenzhen Fountain Corporation(000005) 55 Digital China Information Service Company Ltd(000555) )
Key elements of the report:
On the evening of April 28, the company released the first quarter report of 2022. The company achieved an operating revenue of 1.925 billion yuan, a year-on-year decrease of 5.75%; The net profit attributable to the parent company was 311486 million yuan, a year-on-year decrease of 20.36%; The non net profit attributable to the parent company was 17.191 million yuan, a year-on-year decrease of 50.81%.
Key investment points:
Asset impairment loss dragged down profit growth: Q1 epidemic had a certain impact on the implementation and delivery of some businesses of the company, resulting in a slight year-on-year decline in the company’s revenue. The company’s gross profit margin was 19.42% year-on-year. The sales / management / Finance / R & D expense rates were 3.83% / 2.17% / 0.03% / 6.23% respectively, with a year-on-year change of -0.34% / – 0.09% / – 0.40% / – 0.07% respectively, and the expense rate during the period decreased by 0.9% year-on-year. However, the asset / credit impairment loss increased by 421051 million yuan year-on-year, an increase of 41.98%, resulting in a year-on-year decrease in net profit.
The company’s business structure continued to be optimized and there were sufficient orders on hand: the company’s software development and technical service business realized an operating revenue of 949 million in the first quarter, a year-on-year increase of 19.43%. The operating revenue of soft services in the financial industry was 488 million, with a year-on-year increase of 16.32%. The revenue growth of soft services business and financial business exceeded the revenue growth, indicating the continuous optimization of revenue structure. The gross profit margin of financial soft services reached 29.19%, a year-on-year increase of 1.41 percentage points. In terms of orders, in the first quarter, the overall signed and unsold orders were 6.553 billion yuan, a year-on-year increase of 7.61%, of which the financial technology sector had signed and unsold orders of 3.545 billion yuan, a year-on-year increase of 50.7%. There are enough orders on hand.
Tencent’s strategic investment is expected to deepen the cooperation between the two sides: according to the announcement issued by the company on the evening of April 25, Tencent is the fourth largest shareholder of Digital China Information Service Company Ltd(000555) with a shareholding ratio of 1.99%. The company and Tencent cloud have previously launched several joint solutions in the field of financial technology. This time, Nyingchi Tencent has become the fourth largest shareholder of the company, which shows Tencent’s recognition of the company’s technical strength. From business cooperation to strategic investment, it is conducive to the complementary advantages of both sides and deepen the continuous cooperation between the company and Tencent in the field of financial technology.
Profit forecast and investment suggestions: it is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 124.63/135.8414742 billion respectively, and the net profit will be RMB 474569/665 million respectively. The corresponding closing price PE on April 29, 2022 will be 21.99/18.30/15.67 times respectively, maintaining the “buy” rating.
Risk factors: the business model transformation is less than expected, the promotion of Xinchuang is less than expected, the digital RMB business opportunity is less than expected, and the technology research and development is less than expected.
