Event

According to the company's mid-year report, revenue for the first half of the year reached HK $8.682 billion, up 0.1% over the same period last year; gross profit reached HK $1.542 billion, down 4.5%; business profit was HK $316 million, up 3.6% over the same period last year; profit attributable to shareholders of the parent company was HK $222 million; big data's products and solutions business income reached HK $1.181 billion, an increase of 50% over the same period last year, and gross profit was HK $449 million, an increase of 56% over the same period last year There are plenty of orders on hand, with an unsold amount of HK $7.177 billion signed.

Brief comment

The overall operation remains sound and breakthroughs have been made in customer expansion. In the first half of 2022, against the backdrop of macroeconomic turmoil and repeated epidemics, the company's overall operation remained sound, with revenue of HK $8.682 billion, business profit of HK $316 million, and revenue and profit growth. The company continues to adhere to the customer-centered ploughing strategy, while improving the stickiness of existing customers, actively expand incremental customers, improve service quality, form a word-of-mouth effect, and make a breakthrough in customer expansion. Top 30 accounts for 47% of customer revenue, with a compound growth rate of 79% in the past two years. There are 120 major customers with a compound growth rate of 12% in the past two years, and the number of new customers is 1648, up 20% from the same period last year. While deeply ploughing customers in the core industry, the company is also actively laying out and expanding new areas. in the first half of the year, the company won a number of supply chain service orders from BYD, with a cumulative winning amount of more than 400 million yuan this year.

With the release of digital economic value, big data's business is growing at a high speed. The company unswervingly promotes the implementation of big data's strategy, adopts differentiated management strategies for different types of business, and vigorously develops big data's business. Driven by the company's big data strategy, benefiting from the landing of the national digital economy strategy and the improvement of downstream demand, the company's big data business has achieved rapid growth. In the first half of 2022, the company's income from big data's products and programs was 1.181 billion Hong Kong dollars, an increase of 50 percent over the same period last year, and the proportion of revenue increased from 9 percent to 14 percent. Gross profit was 449 million Hong Kong dollars, an increase of 56 percent over the same period last year, and the proportion of gross profit increased from 18 percent to 29 percent. The business structure continues to be optimized; big data's product standardization has been further improved, with a gross profit margin of 83%, an increase of 16 percentage points over the same period last year, continuously empowering the company's profits. In order to support big data's strategy and business development, the company has strengthened the construction of its R & D system, continuously increased technology research and development through the establishment of three major research institutes and industrial incubation funds, and added a total of 2392 software copyright and patents.

Tamp the "spatio-temporal global data base" and continuously empower innovative scene applications. The company further strengthens the "spatio-temporal global data base" with the three product families of intelligence center, intelligence center and intelligence twins as the core, relies on the intelligence center with Yanyun DaaS as the core, quickly realizes data interconnection, and establishes a trusted data network with independent innovation. By covering the intelligent data center of data lifecycle management, we can realize the fusion and governance of multi-source and heterogeneous data, provide more comprehensive, secure and reliable data services for business scenarios, and use intelligent twins with spatio-temporal knowledge graph and graph calculation as the core. Effectively connect the real world and the digital world, build a comprehensive analysis capability of spatio-temporal integration, and enable innovative scene applications. In April 2022, Yanyun DaaS, the core product of Intelligence Center, joined hands with Changchun Municipal Government customers to complete the development of demand interface and related deployment work within four hours without the cooperation of application manufacturers, and the project efficiency was dozens of times higher than that of traditional programs, providing customers with accurate and efficient data fusion services, effectively helping Changchun City to fight epidemic and resume work. In the future, the company will continue to endow more innovative scenarios such as urban brain, digital trade, digital countryside and digital RMB through the big data product and scheme matrix of "spatio-temporal global data base + artificial intelligence + innovative scenario application".

Investment suggestion: the company big data accelerates its production and will gradually move from the cultivation period to the harvest period. At the same time of steady and high-quality growth of traditional business, the commercialization of big data's products and programs is accelerated, revenue will maintain rapid growth, and market share will continue to expand. From 2022 to 2024, the company is expected to achieve revenue of HK $239.56 million, net profit of HK $9.68 billion and net profit of HK $2.015 billion respectively, corresponding to a valuation of 5.57pm and 4.19max, respectively, maintaining a "buy" rating.

Risk hint: increased competition in the industry, changes in new infrastructure policies, and lower labor costs than expected.