Bank of China Ltd. industry market continues to grow steadily, the impact of the epidemic weakens, the rising trend of personnel costs slows down, and profits will return to the growth trend in the future. According to Sadie consultants, Bank of China Ltd. invested 231.908 billion yuan in IT in 2021, and Bank of China Ltd. 's IT investment is expected to reach 504.725 billion yuan in 2026, with an average annual compound growth rate of 16.17% from 2022 to 2026. The market size of Bank of China Ltd. 's IT solutions will reach 47.959 billion yuan in 2021. It is estimated that the market size of Bank of China Ltd. 's IT solutions will reach 139.011 billion yuan by 2026, with an average annual compound growth rate of 23.55 percent from 2022 to 2026. The financial IT policy has been introduced intensively, the trend of centralized to distributed migration has been determined, the establishment of municipal agricultural commercial banks by rural credit institutions has been accelerated, the national Xinchuang strategy has been rapidly implemented in the financial industry, and the industry cycle has been upward. During the epidemic period, the gross profit margin declined due to factors such as delayed acceptance. Looking to the future, the impact of the epidemic was greatly weakened, the rising trend of IT personnel costs slowed down, and the industry returned to the profit growth trend in the future.
Take advantage of the potential of China Financial Electronic Group (hereinafter referred to as "Golden Power Group") to open up a broad incremental market and increase the gross profit margin of the software business. As a leading financial IT provider, Gao Weida has reached a strategic cooperation with Jindian Group. As a financial IT enterprise directly under the people's Bank of China, Gao Weida will continue to expand a wider range of high-quality projects and customers in the future, and the company's revenue growth is expected to increase significantly. As Jindian Group has just completed its restructuring and is still in the capacity-building period, it is expected that Gao Weida will be an important strategic partner in the cooperation, thereby increasing the proportion of software revenue from high-margin solutions and raising the overall gross profit margin of the software business.
The company's innovative business continues to increase the proportion of software business, and the company is expected to see an increase in revenue and profit in 2023. In the face of the huge opportunities of the digital RMB in the ascendant, the transformation and upgrading of the RMB payment system, and the supervision of scientific and technological development to promote data elements, the company has laid out in advance to open up new market space. The company strives to improve the proportion of software, adhere to the "personnel localization" strategy, and constantly improve the comprehensive gross profit margin. We believe that the banking IT industry cycle upward, the company continues to expand innovative software business, release past disadvantages the company is expected to usher in revenue and profit growth.
Earnings forecast and valuation: give a "buy" rating. We predict that the company will achieve revenue of 14.9,20.6 and 2.81 billion yuan from 2022 to 2024, and realize net profit of-0.78,2.01 and 280 million yuan respectively. The EPS was-0.17,0.45,0.63 yuan, respectively, and the corresponding Ppace E was-59.71,23.1,16.60 times. Give Gao Weida a valuation of 40 times its target in 2023, covering a "buy" rating for the first time.
Risk hint: if policy implementation slows down, banks reduce investment in IT solutions, market competition intensifies, and cooperation with partners is not going well, bank IT business growth may be lower than expected.
