Main points of investment
The income grew steadily and steadily. Thanks to the focus on big data's strategy and deep cultivation of customers in key industries, 2022H1 achieved operating revenue of HK $8.682 billion, up 0.1% from a year earlier, with a gross profit of HK $1.542 billion (YoY-4.5%) and a gross profit margin of 17.8% (year-on-year-0.9pcts). In terms of expense rate, the total operating cost of 2022H1 is HK $1.39 billion (YoY+3.2%), and the total operating expense rate is 16.0% (year-on-year + 0.5pct): 1) sales and distribution expenses HK $458 million (YoY-21.4%), sales and distribution expense rate 5.3% (year-on-year-1.4pct); 2) Administrative expenses of HK $195 million (YoY-13.0%), administrative expenses rate of 2.2%, basically unchanged from the same period last year 3) the net amount of other expenses is HK $736 million (YoY+36.5%), and the rate of other expenses is 8.5% (year-on-year + 2.3pct).
Benefiting from the meticulous management strategy, 2022H1 achieved a net profit of HK $222 million (YoY+0.7%) and a net interest rate of 2.6%, a year-on-year + 0.1pct.
The value of the digital economy has been released and the business structure has been continuously optimized. 2022H1 realized big data's business income of HK $1.18 billion (YoY+ 49.7%) and gross profit margin of 38.0% (year-on-year + 1.5 pcts), while software and operating income of HK $2.76 billion (YoY+3.2%), gross profit margin of 18.1% (year-on-3.6pcts), traditional services business income of HK $4.82 billion (YoY-8.8%), gross profit margin of 12.3% (year-on-year-1.8 pcts). Big data's business development continues to be eye-catching: big data's product standardization has improved, with a gross profit margin of 83% (YoY+16pcts); a total of 2392 new intellectual property rights have been added; in addition, the company has also continued to increase technological research and development through the establishment of three major research institutes and industrial incubation funds. At the same time, the company continues to make breakthroughs in customer expansion. In the past two years, the proportion of Top 30 customers' revenue has increased to 47% (year-on-year + 11 pcts), CAGR + 79%; the number of major customers above 10 million has increased to 120, CAGR + 12%; and the number of new customers has increased to 1648 (YoY+20%).
The gradual improvement of the company's products and the accumulation of customers promote the continuous optimization of the company's business structure and promote the gradual transformation of the company to big data products. 2022H1 big data's share of business revenue increased from 9.1% to 13.6%, and gross profit increased from 17.9% to 29.1%.
Investment suggestion: the company actively implements the adjustment of business structure and the long-term layout of digital economy business. 2022H1 revenue and gross profit are outstanding. Downgrade the company's 2022-2024 revenue of HK $23.19 billion / 26.41 billion / 30.45 billion, revenue growth of 12.9%, 13.9% and 15.3% respectively, net profit of HK $1.2 billion / 1.38 billion / 1.63 billion, and current price of 4.0x/3.5x/3.0x corresponding to PE, maintaining the "buy" rating.
Risk tips: 1) macro policy changes; 2) customer expansion is not as expected; 3) intensified competition in the industry.