Report guide

Revenue growth of 95% from January to September in 2021 is in line with expectations. Fixed increase restart, and the cooperation with mobile strategy is expected to bring 2 billion new contracts in the next three years, with new profits of 1.67,2.21 and 274 million yuan respectively.

Main points of investment

Thanks to the accelerated promotion of party and government innovation and the strong demand for industry security, Q3 revenue increased by 95%.

In 2021, Q1-Q3 's revenue of 392 million yuan increased by 95% over the same period last year, the net profit of 38.2 million yuan increased by 258% over the same period last year, and the non-net profit of 21.774 million yuan increased by 193% over the same period last year. Among them, Q3's single-quarter income of 184 million yuan increased by 57% compared with the same period last year, the net profit of 52.28 million yuan decreased by 4%, and the non-net profit of 52.2176 million yuan increased 61% compared with the same period last year.

Bidding tends to be rational, higher prices of the industry Xinchuang bidding opened, the gross profit margin increased by 7.14%.

In 2021, Q1-Q3 achieved a comprehensive gross profit margin of 87.16%, an increase of 7.14 pct., over the same period last year. We believe that the main reason is that with the rational bidding of the party and government in 2021 and the opening of the bidding of the industry in 2021, the price is higher than the party and government bidding, and the company's profitability has improved.

Dingzeng restart cooperation with mobile is expected to increase profits of 1.67,2.21 and 274 million yuan in the next three years.

In August 2021, Dongtong and China Mobile signed a strategic cooperation to add each other to their highest-level partner list. On September 28, the company received the audit notice to resume the increase and restart it. According to the inquiry letter, after the strategic investment, Dongtong is expected to have a higher market share, more obvious product advantages, and fully benefit from the channel capacity of China Mobile. It is estimated that Dongfang Tong will increase the order amount by 5.05,6.67 and 828 million yuan from 2022 to 2024. Assuming that the net interest rate is 33%, the net profit generated by the new order is expected to be 1.67,2.21 and 274 million yuan, respectively.

Industry innovation is expected to accelerate in 2022, with the financial industry taking the lead in market share and enjoying alternative dividends.

In 2022, the industry Xinchuang is expected to accelerate its infiltration from the party and government offices to eight major industries, and the alternative space is expected to expand several times. In the financial industry, the market share of middleware products is leading in the industry, and it is expected to fully benefit from the wave of financial innovation.

Profit forecast and valuation

The net profits attributed to the parent company from 2021 to 2023 were 4.03,6.12 and 901 million yuan respectively, an increase of 65%, 52% and 47% respectively over the same period last year. EPS 0.89,1.28,1.88 yuan, corresponding to the previous share price PE 34, 22 and 15 times. Give the company 60 times the target PE in 2021, corresponding to the target market value of 24.2 billion yuan, the target price of 53.15 yuan per share, an increase of 77%, and maintain a "buy" rating.

Risk tips 1, cooperation with mobile is not up to expectations; 2, Xinchuang is not up to expectations; 3, industry competition risk.