\u3000\u3000 China Transinfo Technology Co.Ltd(002373) (002373)
Event: Recently, the State Council issued the "14th five year plan" for the development of digital economy, which defined the development direction of digital economy in the next five years. The plan proposes to "orderly promote the intelligent upgrading of infrastructure and accelerate the digital transformation of infrastructure in the fields of energy, transportation, water conservancy, logistics and environmental protection".
The 14th five year plan of various departments has been issued one after another, and many references have been made to the smart transportation industry: the latest "plan" and relevant ministries and commissions such as the Ministry of industry and information technology and the Ministry of transportation have successively issued the "14th five year plan" related to smart transportation in the past three months. In the "14th five year plan" for the development of information and communication industry issued by the Ministry of industry and information technology in November last year, it was clearly proposed to "strengthen the top-level design of the deployment of vehicle networking infrastructure based on c-v2x, and promote the upgrading and transformation of expressway vehicle networking and the construction of national vehicle networking pilot area"; The 14th five year plan for the development of digital transportation issued by the Ministry of communications points out that by 2025, the six goals of "digital perception of transportation facilities, extensive coverage of information networks, convenient and intelligent transportation services, online coordination of industry governance, active technological application innovation and strong network security guarantee" will be achieved. In addition, in February last year, the CPC Central Committee and the State Council issued the outline of the national comprehensive three-dimensional transportation network planning, which required to promote the digitization and networking of transportation infrastructure, and clearly proposed that the digitization rate of transportation infrastructure should reach more than 90% by 2035. We believe that during the "14th five year plan" period, various departments have successively issued plans for intelligent transportation or digital transportation, which has far-reaching guiding significance for industrial development in the next five years. China's intelligent transportation and vehicle networking leader is currently facing important internal and external changes: China Transinfo Technology Co.Ltd(002373) is a leading enterprise in China's intelligent transportation and vehicle networking industry. From informatization to digital intelligence, the transportation industry has high prosperity and large market space. According to the statistics of Zhiyan consulting, the market scale of intercity high-speed intelligence will be about 63.2 billion yuan in 2020; According to the estimation of 2020 roadside intelligent perception Industry Research Report, the market scale of roadside perception will exceed 40 billion yuan in 2025. According to the global smart city expenditure guide released by IDC, the investment scale related to smart city technology in China will reach US $22.9 billion in 2019. On the one hand, the company has benefited from the trend of informatization, digitization and intelligence in the transportation industry for a long time, and its revenue and profit have increased steadily. On the other hand, due to the low concentration of the transportation industry and the fragmentation of demand, the company has always failed to form a scale effect, and the gross profit margin has been suppressed. In 2020, China Transinfo Technology Co.Ltd(002373) made a major strategic transformation. Combined with the expectation of the recovery of new infrastructure investment during the 14th Five Year Plan period, especially in 2022, we believe that the company has undergone important internal and external changes:
External change 1: successively winning major projects in many places, and the prosperity of the industry is gradually rising. In the second half of 2021, the company won several major projects in succession. In August, the company announced that it won the bid for Dali City perception improvement project, with a total investment of about 964 million yuan, which is divided into three stages. It is the specific practice of the company's core technology enabling intelligent transportation construction, and is expected to become one of the successful cases of its subsequent promotion. In October, the company announced that it had won the bid for the Tianshui expressway project with a value of 635 million yuan, which was used to enhance the management department's ability to collect traffic and road information and deal with expressway traffic abnormalities. In November, the company won the bid for the intelligent parking system project in Nankai District, Tianjin, with a value of nearly 300 million yuan, covering the construction of parking information system, dynamic and static traffic supervision platform, parking operation management platform and so on. We believe that the company has won many large orders in succession, which confirms that the prosperity of the industry is gradually rising as an important part of infrastructure digitization and intelligent chemical energy. External change 2: capital increase of Lianlu intelligent transportation and acceleration of vehicle road coordination strategy. According to the company's announcement, the company increased its capital in Lianlu intelligent transportation last year and obtained 38.65% of its equity. The second largest shareholder of the latter is continental group. We believe that the company's capital increase of Lianlu intelligent transportation is an important layout in the field of vehicle road coordination, which is expected to form a complete closed loop from vehicle end to road end. With the continuous evolution of the "new four modernizations" of China's automobile, the vehicle end networking and intellectualization are expected to usher in rapid development during the 14th Five Year Plan period, and the application scenarios based on the integration of road networking and vehicle end networking will be accelerated. Through cooperation with Continental group, the company is expected to connect the two business lines of vehicle and road and strengthen the synergy of vehicle and road. On the one hand, with the help of continental group's existing front loading technology, experience and products, it can be used to improve, upgrade and expand the existing vehicle side products of Lianlu intelligent transportation. On the other hand, it benefits from its previous deep understanding of China's traffic scenes and customer needs, The addition of the company is also conducive to accelerating the expansion speed of Lianlu intelligent transportation, and then increasing the market share. In general, we believe that continental and the company have strong synergy. Through complementary advantages, the two sides can give play to the effect of "1 + 1 > 2", so as to accelerate the integration and application of vehicle road synergy technology. Internal change 1: establish boguan intelligence, strengthen AI capability, and enhance the added value of business technology with internal and external empowerment. Judging from the content of the projects won by the company recently, the degree of digitization and intelligence has been significantly improved. For example, Dali project covers the front-end sensing equipment of the whole Prefecture Expressway situation awareness and "four in one" monitoring and early warning, the whole Prefecture national and provincial trunk line accident early warning and monitoring and intelligent guidance and diversion, the whole Prefecture traffic intelligent decision support, the whole Prefecture traffic and transportation off-site overload control and other systems; In Tianjin Nankai District smart parking project and Ningbo Urban Smart car infrastructure, a series of ICT technologies such as big data, Internet of things, cloud computing and intelligent video recognition are used. We believe that the construction of AI capability of the company is a major layout of strategic transformation. Therefore, the company has established boguan intelligence as a business unit parallel to intelligent transportation and intelligent IOT. Boguan intelligence, established by the company in 2019 by integrating AI teams in the field of intelligent IOT and intelligent transportation, is mainly responsible for the construction of AI core competence platform and strengthening the application of AI capabilities, empowering domestic AI with global transportation and intelligent security business, and developing a broad tob market externally to help enterprises' digital intelligence transformation. At present, boguan intelligence's own business is developing rapidly. We expect that boguan intelligence is expected to improve the added value of solution technology and promote the continuous optimization of the company's profitability through internal and external empowerment. Internal transformation 2: omni-t leads the transformation of the company's business model and continues to realize the transformation logic from project system to platform. In 2020, the company released omni-t, the industry's first global transportation solution. On the one hand, it expanded the middle platform by forming standard modules, so as to improve the reuse rate of the project; On the other hand, it also catalyzes the transformation of the company from project system to platform. According to the disclosure of the company's 2021 semi annual report, up to now, some products of the company have achieved the satisfaction rate of standard modules of similar businesses of nearly 80%, the R & D hours have decreased by nearly 40%, the revenue of transportation cloud business 21h1 has reached 116 million yuan, with a year-on-year increase of 210%, and the gross profit margin has increased to 52%, an increase of 19 percentage points over the same period last year. In addition, in nearly half a year's projects, the company's transformation logic from project system to platform has also been continuously fulfilled. According to the disclosure on the company's official website, the company will provide operation services such as intelligent road test and innovative application demonstration management for the next five years in Ningbo Urban Smart car infrastructure, and continue to help Ningbo build a vehicle road collaborative demonstration project; Tianjin Nankai District project is a dynamic and static integrated transportation comprehensive solution based on full video internet of things + intelligent parking cloud; In the past year, the company's omni-t global transportation solution has been implemented in smart transportation projects in 24 provinces and cities across the country. We believe that at present, the company is at the key node of business model upgrading and has a good development momentum. The transformation logic from project system to platform is expected to continue to be realized.
Investment suggestion: we believe that the company is the leader of intelligent transportation and the leader of intelligent IOT. With the business model transformation brought by omni-t and the establishment of boguan intelligence to strengthen AI and product capabilities, the capital injection of Lianlu intelligent transportation has accelerated the closed-loop of vehicle end and roadside solutions, and the long-term competitive advantage is expected to expand. The company is the direct beneficiary of the digital economy. With the continuous recovery of new infrastructure, we expect the company's revenue to be 10.68/12.9/15.44 billion yuan from 2021 to 2023, and the net profit attributable to the parent company to be 1.13/14.7/1.87 billion yuan respectively, maintaining the Buy-A investment rating. The 6-month target price is 23.24 yuan, corresponding to 25 times of PE in 2022.
Risk tips: 1) overseas epidemic recovery is less than expected; 2) The transformation speed of industry digital intelligence is lower than expected; 3) The landing speed of the company's intelligent transportation solution is lower than expected; 4) The risk of intensified competition in the industry.
