Incident: Company Announcement Performance Forecast: Net profit attributable to shareholders of listed companies in 2018 was 177.1936 million yuan to 233,4787 million yuan, a change of -15% to 12% over the same period last year.
The main business grew steadily overall in 2018, with subsequent priority benefiting from the implementation of new regulatory policies. 1) According to the announcement, the company's main business (asset management IT and custodial IT) generally showed a good development trend in 2018, and revenue increased steadily over the same period last year. However, due to slowing macroeconomic growth, declining capital markets, and declining policy demand, the company's contract orders for the fourth quarter fell short of expectations. 2) At the end of 2018, policies and rules such as new asset management regulations were gradually implemented, and the demand for new construction and upgrades of IT systems related to financial institutions increased. However, the company has an absolute market share and product advantage in the asset management IT back-office system and escrow system market, and is expected to benefit first as an industry leader.
The contraction of the subsidiary's financial business and continued high investment in R&D affected performance growth. 1) The supply chain finance business of the holding subsidiary Yingliang Financial and the factoring business of Yingbao Commercial Insurance were affected by the macroeconomic environment and policies. The scale of operations shrank, and operating performance declined compared to the same period last year. 2) Most of the company's other foreign-invested companies are startups in the new technology category that are in the incubation period. The contribution to net profit in 2018 decreased significantly compared to the same period last year. 3) Due to the company's continued high R&D investment and rising labor costs, this year's net profit growth was also affected.
IT leader in domestic asset management and escrow, focusing on FinTech strategies for a long time. 1) The company covers more than 350 financial customers in its two core product lines “Asset Management System” (AMS) and “Asset Custody System” (ACS). Among them, the coverage rate of custodian banks reached 89%, fund companies covered 95%, and securities companies covered about 50%. It is a leading domestic asset management and custodian IT manufacturer. 2) The company has been focusing on the strategic field of fintech for a long time, actively deploying cutting-edge technologies such as blockchain, big data, and artificial intelligence. The value of many of its high-quality fintech assets is expected to be revalued.
The target market capitalization for 2019 is 10.8 billion yuan, maintaining the “buy” rating. Adjust the company's operating income and net profit forecasts for 2018-2020 based on the company's announced business progress and key assumptions. Operating revenue for 2018-2020 was lowered from 826 million, 1,201 million and 1,588 million to 743 million, 1,132 million and 1,473 million respectively, while net profit attributable to the mother was lowered from 271 million, 371 million and 457 million to 212 million, 316 million and 366 million respectively. That is, the net profit CAGR for 2018-2020 was 31%. Considering the implementation of policies such as the new asset management regulations in 2019 to increase downstream demand, PEG = 1.1 was given, corresponding to the target market value of 10.8 billion yuan in 2019. Maintain a “buy” rating.
Risk warning: macroeconomic risk; core team stability risk; risk of rising personnel costs; risk of differences between forecast assumptions and actual conditions.