\u3000\u30 Shenzhen Fountain Corporation(000005) 55 Digital China Information Service Company Ltd(000555) )
Event overview
The company recently released the first quarter report of 2022. 22q1 achieved an operating revenue of 1.925 billion yuan, a year-on-year decrease of 5.75%, and a net profit attributable to the parent company of 31.15 million yuan, a year-on-year decrease of 20.36%. We believe that the decline of 22q1 performance of the company is mainly due to the impact of the epidemic. The company’s performance is quite seasonal. According to historical experience, Q1 revenue accounts for no more than 20% of the annual revenue and profit accounts for about 10%, so it has little impact on the whole year. We believe that with the gradual decline of the impact of the epidemic, we are still optimistic about the development of the company throughout the year.
The business structure was continuously optimized, and 22q1 financial soft services grew well
According to the disclosure of the first quarterly report, the revenue and profit of 22q1 company decreased year-on-year, which was mainly affected by the epidemic, and the travel of some personnel of the company was limited, which had a certain impact on the normal development of business negotiation, implementation and delivery. However, from the perspective of income structure, 22q1 company continues to achieve optimization. According to the disclosure of the first quarterly report, the software development and technical service business of 22q1 company realized an operating revenue of 949 million, a year-on-year increase of 19.43%. The operating revenue of financial soft services reached 488 million, a year-on-year increase of 16.32%, and the gross profit margin of financial soft services reached 29.19%, a year-on-year increase of 1.41 percentage points. The company has sufficient orders on hand. In the first quarter, the overall signed but unsold amount was 6.553 billion yuan, a year-on-year increase of 7.61%, of which the financial technology sector has signed but unsold amount of 3.545 billion yuan, a year-on-year increase of 50.7%. We believe that the company’s development strategy of continuously focusing on financial technology has continued to achieve good results in 22q1.
The financial industry continues to expand, with multi-point flowering of Xinchuang + digital currency + scenario finance
22q1 company continued to focus on financial technology strategy, and orderly promoted the expansion of products and solutions, financial information innovation and scenario financial business: 1) financial information innovation business: according to the disclosure of the first quarterly report, 22q1 company signed a large state-owned bank and several urban commercial banks with a total amount of 104 million, and carried out information innovation consulting in more than 30 banks, securities, insurance and other financial institutions; 2) Digital RMB business: 22q1 company’s digital RMB business serves financial institutions such as Bank of Sichuan, Bank of Qinghai and Nanyang Commercial Bank, and promotes the implementation of the function of multi currency wallet. At the same time, the prepaid card platform based on blockchain technology has been put into trial operation. 3) Scenario financial business: nearly 10 institutions including ICBC technology, Baixin bank and Suning bank won the bid and signed the contract in 22q1, jointly built online credit products and risk models with customers, and used innovative technologies to help solve the financing problems of small, medium and micro enterprises.
Open share repurchase to show development confidence
On April 15, 2022, the company deliberated and approved the proposal on repurchase of shares of the company by means of centralized bidding transaction. The company plans to use its own funds to repurchase A-Shares of the company by means of centralized bidding transaction for the implementation of the company’s employee stock ownership plan or equity incentive. The total amount of this repurchase fund is not less than RMB 100 million and not more than RMB 200 million (both inclusive). According to the calculation of the upper limit of repurchase fund of 200 million yuan and the upper limit of repurchase price of A-Shares of 19 yuan / share, the number of shares repurchased by the company this time is about 105263 million shares, accounting for about 1.0701% of the current total share capital of the company. We believe that on the one hand, the company’s share repurchase reflects the company’s confidence in future development. On the other hand, the repurchased shares are used for employee stock ownership or equity incentive, which is also expected to further condense the consensus of core employees and achieve better business development.
Investment advice
Digital China Information Service Company Ltd(000555) has more than 30 years of experience in providing scientific and technological services to financial institutions. At present, it continues to focus on financial technology strategy and has perfect financial products and solutions. Driven by the upgrading of bank it system architecture, the continuous promotion of financial information innovation and the application of scenario financial scale represented by digital RMB, it is expected to achieve long-term steady growth of business. We expect the company to achieve operating revenue of RMB 12.545139.57/15.639 billion in 2022 / 23 / 24, with a year-on-year increase of 10.5% / 11.3% / 12.0%. The net profit attributable to the parent company was 452 / 550 / 674 million yuan, with a year-on-year increase of 20.2% / 21.6% / 22.6%. Maintain the investment rating of Buy-A and give a six-month target price of 13.80 yuan, equivalent to 30 times the dynamic P / E ratio in 2022.
Risk warning: the research and development of core technology is not as expected; The demand of the financial industry was lower than expected.
