The current situation of the company
The company released 3Q22 operation data: 1) according to customer data, by the end of 3Q22, the number of core enterprise / financial institution partners of Lianyirong had reached 980 (the end of vs.1H22 was 880), of which the number of core enterprise / financial institution income-generating customers had reached 327According to 141of vs.1H22). 2) from the perspective of transaction volume data, its direct financing business has achieved high growth compared with the previous month, and the growth of asset securitization / emerging solution business has recovered from the previous month, which is in line with our previous expectations.
Comment
The total 3Q22 transaction volume of the company is + 6% / month-on-month + 58% to RMB 83.2 billion, and the total transaction volume of 1-3Q is from + 10% to RMB 199.1 billion. The main analysis is as follows:
Asset securitization business (AMS&ABS): the 3Q22 transaction volume of the company's asset securitization business is-16% / month-on-month + 59% to 35.7 billion yuan (including AMS cloud + 9% / month-on-month + 90% to 26.7 billion yuan, ABS cloud-51% / month-on-month + 7% to 8.9 billion yuan). The year-on-year contraction in business volume is mainly due to the impact of marginal changes in real estate customers' financing environment and demand. The main increase is contributed by asset securitization of non-real estate (such as infrastructure / manufacturing, etc.). Looking ahead, although the company's factoring company ABS circulation shows some signs of recovery after April this year, but considering the epidemic and other factors, we give the business a more conservative growth forecast (22e/23e trading volume is flat / + 11%, respectively).
Direct financing business (multi-level circulation & e-chain cloud): the 3Q22 transaction volume of the company's direct financing business is + 38% / month-on-month + 58% to 43.3 billion yuan compared with the same period last year, of which the multi-level flow cloud year-on-year + 148% / month-on-month + 116% to 27.1 billion yuan, mainly due to the recovery of direct financing needs of non-real estate core enterprise customers and the gradual increase in the number of new core enterprise customers in 1H22 E-chain cloud year-on-year-21% / month-on-month ratio of + 8% to 16.2 billion yuan, mainly due to the slowing down of the signing speed caused by the interviewing process of customers of financial institutions during the epidemic. Looking ahead, with the gradual macroeconomic recovery, the demand for supply chain financing in the non-real estate sector accelerates, we believe that the company's business is expected to maintain high growth.
Emerging solutions (cross-border cloud & SME credit technology): the 3Q22 transaction volume of the company's emerging solutions is-7% / month-on-month + 63% to 4.2 billion yuan, of which cross-border cloud is + 1% / month-on-month + 60% to 4.1 billion yuan, mainly due to the slow progress of cross-border e-commerce business affected by the epidemic SME credit technology solution year-on-year-76% / month-on-month + 410% to 110 million yuan, the company will gradually shrink credit business and gradually transform into data-empowered SME credit technology solution.
Profit forecast and valuation
Keep the profit forecast unchanged for the time being. The company is currently trading on 23x/15x 22e/23e Pamp E. Taking into account the company's leading market position and the growth potential brought about by new business development, there is 48% room for growth to maintain the company's target price of HK $5.2 (based on 22x 23e Pmax E) and outperform industry ratings.
Risk
The recovery of customer financing demand is not as expected; the proportion of real estate customers is high; the risk of asset securitization "crossing the bridge".