Ploughing comprehensive IT service providers in the field of social security. The company is positioned as a "social security and livelihood integrated operation service provider", the main business includes "all-in-one card" and AIoT application and Renshe big data service, focusing on building the financial social security card application industry chain. Benefiting from the issuance of the third-generation social security card, the company's revenue growth rate has increased from 6.1% in 2021 to 50.2% in the first three quarters of 2022. The overall expense rate has entered the downward channel. The net profit growth rate of homing in the first three quarters of 2019-2022 is 26.9% and 65.8%, respectively. The 2022 equity incentive plan sets the target for performance growth from 2023 to 2025 (based on 2021) of 110%, 190% and 270%, respectively, demonstrating the company's confidence in sustained and rapid development in the future.
"all-in-one Card" has opened up 55 billion of the market space, and the company has significant advantages in the field of deep cultivation for many years. After more than 20 years of development, the function of social security card has been continuously improved, the chip capacity is larger, and it is easy to create more application scenarios. In 2021, the Bureau of Human Resources and Social Affairs proposed to "promote the establishment of a new pattern of residents' all-in-one card" with social security cards as the carrier, and promote the release of third-generation social security cards to become the landing carrier of "all-in-one cards". The next three years will be the peak period for card issuance.
The company has been deeply engaged in the social security and livelihood industry for many years, and has the comprehensive operation capability of the "social security card +" industry chain. It is expected to promote the issuance of cards with scene construction and services, and the market share is expected to continue to increase.
With the third-generation card as the soil, derivative services open the growth ceiling. Through full-volume, accurate data-driven, the company provides accurate personnel-post matching and active push services to solve the difficulties in recruitment, employment and other problems. At present, the business has landed in 16 provinces and more than 150 cities, districts and counties across the country, can be replicated in various provinces and cities on a large scale, and is expected to land in more provinces. By the first half of 2022, the income from Renshe operation and big data services had reached 88 million yuan, a rapid increase of 450% compared with the same period last year, and the amount of contract orders increased by 104.61% compared with the same period last year.
Investment suggestion: in the short term, 2023-2025 is expected to become the peak of the third-generation card volume, and the company has the advantage of software capabilities such as card management, with strong certainty of performance growth; in the long run, with the continuous promotion of policies such as convenience and security, the third-generation card has both social security, financial, medical, government and other multi-dimensional attributes, carrying the core livelihood data, and the subsequent market for supporting services based on its derivatives is broad. We predict that the company will achieve an income of 996 million yuan, 1.56 billion yuan and 2.15 billion yuan from 2022 to 2024, and a net profit of 110 million yuan, 190 million yuan and 260 million yuan, corresponding to a PE valuation of 47 times, 27 times and 20 times, respectively.
Risk hint: the technology iteration is not as expected, the penetration of the third generation card is not as expected, and the macro environment is under pressure.