The company maintains a healthy and healthy development trend and its performance is eye-catching. In 2022, the company achieved a total revenue of 7.738 billion yuan, an increase of 12.2% over the same period last year. Among them, the revenue of BSS traditional business was 4.925 billion yuan, up 0.2% over the same period last year; the revenue of digital intelligence operation business (formerly DaaS business) was 1.15 billion yuan, up 57.6%; and the revenue of vertical industry and enterprise cloud business was 757 million yuan, an increase of 78.2% over the same period last year. Overall, the company's newly signed orders have increased by more than 10%, while the three new business new orders have increased by more than 50%. The strategic goal of maintaining a solid basic market (BSS business) and rapidly developing the three new businesses has reached 33.3%.

In 2022, the company's gross profit margin remained above 38%; the three expense rates remained within a reasonable range, with a R & D expenditure rate of 14.3% (R & D expenditure reached 1.1 billion), marketing expense rate of 7.7%, and management expense rate of 4.5%; the company achieved a full-year net profit of 824 million yuan, with a slightly lower net profit rate, but remained at a double-digit percentage level (10.7%). The company continued to pay a large dividend of HK $0.401 per share and a profit dividend ratio of 40 per cent. Taking into account the special circumstances of 2022, the performance is already very outstanding compared with other companies in the industry.

The three new businesses continue to grow at a high speed. The company's digital intelligence operation business was completed in the business restructuring of iResearch Consulting in 2022, the business scale exceeded 1 billion yuan for the first time, and the proportion of income outside the communications industry increased to 28%, of which the proportion of results-based payment was maintained at 22%. After integrating iResearch Consulting, the company puts forward two core development directions, namely, intelligent operation and intelligent decision-making. Intelligent operation includes TMT, government and enterprise, consumption and networking of smart cars. Intelligent decision-making includes consulting services such as strategic consulting, special research and industry research. Relying on the data authorization of the three major operators, the company has a broad development prospect in the field of pan-TMT, such as value operation, smart city, interactive marketing and intelligent network connection. The business of the company's vertical sector (enterprise cloud) is growing very fast, of which energy, government and transportation are the main business contribution industries, especially the energy industry. The company's 5G private network began to land on a large scale, the government affairs big data platform business began to take shape, intelligent transportation continued to deepen, and it was upgraded to a strategic partnership with major cloud vendors, becoming an important general integrator and delivery supplier in the cloud vendor ecology. 5G private network is one of the key vertical directions invested by the company. the company provides full-stack end-to-end 5G private network solutions, including 5G core network, base station products and private network operation products, and supports all network construction methods, such as virtual private network, hybrid private network and independent private network. According to the data of China Institute of Information and Communication, the market of 5G private network is huge, with a market size of between 46 billion and 80 billion in 23 to 27 years, with great potential for development. In the field of OSS business, the company works closely with the three major operators in computing network, digital twinning, network self-intelligence, and deep integration of cloud BSS&OSS, to give full play to the technical advantages of the company's OSS and achieve the development strategy of rapidly occupying the market, with the goal of achieving a market share of 25% to 30% by 2025.

The field of information innovation has been actively ploughed. The company's self-research database AntDB achieves 60 million of sales and has 23 contracted customers. AntDB puts forward the concept of "super-fusion", which is simply a set of databases to solve the needs of all types of databases. The autonomy rate of the company's database code is 95%. In the ranking of Motian wheel, it has risen 24 places compared with a year ago, ranking 12th. According to the data of China Institute of Information and Communication, the domestic database market will maintain a compound annual growth rate of 17% under the background of Xinchuang in China, and will reach 80 billion in 2027, with broad market prospects. The company deeply ploughs the vertical big B field, and will retain enough potential in the domestic replacement of database in the future.

Full stack digital enablement driven by digital intelligence. From the perspective of business division, the company not only emphasizes intelligent operation, but also highlights the end-to-end full stack digital capability, not only the continuous output of standardized products, but also the market coverage of the project system. The product system covers various business platforms, AI products (including AIGC), cloud-network convergence product system and IT product system, and begins to evolve to 6G computing sense integration based on 5G technology, providing comprehensive mathematical intelligence transformation capability for wisdom + industry. From a horizontal point of view, we believe that there are not many high-quality and robust ICT manufacturers such as AsiaInfo Technology that provide data operation + standardized products + big B project coverage across the communication + pan-industry.

Investment advice. According to the valuation of comparable companies by business lines, the average PE of comprehensive ICT manufacturers involved in telecommunications services is 23 times in 2023; in the field of SaaS, the average PS of American SaaS manufacturers in 2023 is 10 times, which is much higher than the average PS of domestic SaaS manufacturers (4 times); in the vertical field, several typical American MSP manufacturers are selected, with an average PS of 6 times in 2023; and in the field of OSS, the average PS is 6 times in 2023.

Valuation logic

We forecast that the company's operating income from 2023 to 2025 will be 88.87 (- 1.56%) / 100.5 (- 1.46%) / 11.257 billion yuan respectively. The net profit was 10.15 (+ 0.79%) / 11.65 (+ 2.46%) / 1.371 billion yuan respectively, and the CAGR of net profit in the period 2021-2025 was 14.9%. We use the method of valuation and summation of each business line, among which, because the net profit of the company is still mainly generated by BSS business, BSS business uses PE valuation method, and other business lines use PS valuation method. In terms of BSS business, with reference to China Telecom Corporation Hong Kong stocks (0728.HK), the 2023 PE forecast is 9.9; considering the low growth of BSS revenue of AsiaInfo Technology, as a traditional telecommunications business, we give 5 times PE. In terms of digital intelligence operation business (formerly DaaS business line), with reference to comparable SaaS (China), considering its revenue scale, growth and the uniqueness of its data authorization, we give 2023 4 times PS; vertical industry and enterprise cloud (MSP) business, reference to comparable companies, considering its industry status and high growth level, we give 4 times PS in 2023 In terms of OSS business, with reference to comparable companies, taking into account its industry leadership and growth level, we will give 5 times PS (- 16.67%) in 2023. If the four business lines are added together, the target market capitalization is 20.795 billion yuan (+ 23.85%). Calculated on the basis of 930.44 million common shares (+ 0.18%), the target price is 22.35 yuan per share (+ 23.62%, corresponding to HK $25.29 per share) (RMB Hong Kong dollar exchange rate: 0.8837). Maintain the "better than the market" rating.

Based on the fact that the overall PE after the valuation of the sub-business line is 20 times, which is lower than the average PE multiple of horizontally comparable ICT (23 times), we believe that the company is within a reasonable valuation range.

Risk hint. The company's BSS business shrinking affects profitability, three new business growth is lower than expected, affecting the valuation level and other negative factors.