Financial supply-side reform focuses on small and micro financing problems, and supply chain finance will usher in great development.
At the central level, in view of the reform on the financial supply side, the central government pays attention to solving the problem of financing difficulties and expensive financing for small and micro enterprises. The CBIC asked the five major banks to take the lead in increasing the balance of small and micro financial loans by 30%. At the same time, it is expected to promote the real expansion of small and micro loans by relaxing the limit on 3pct for small and micro enterprises. It is optimistic that the supply chain financial business as a weak guarantee model will benefit from the trend of expansion of small and micro loans, with a potential space of several trillion yuan.
The financial model of the company's supply chain has been recognized by the bank, and its risk control ability is the most promising.
Relying on Wangsheng financing guarantee platform and business access to the third-party payment platform, the company provides comprehensive inclusive financial services for small and micro enterprises to solve the financing pain points of small and medium-sized enterprises. The company model has the three elements of risk control, customer source and capital needed for the success of supply chain finance. The massive transaction data of the risk control side is the basis for the company to identify the risk, and the reverse guarantee reduces the platform risk; the industry channel of the customer source alliance + small portal model is broad; the capital side has been recognized by many banks, and the advantages of capital scale and cost are obvious. As an excellent representative of supply chain finance, CCTV reported that the influence of the industry is expected to be further expanded, and the scope of cooperative banks is expected to be further opened.
Local governments cooperate to open the funding bottleneck, and scale replication is expected to accelerate the release of performance.
The company and the local government of Bengbu set up a guarantee service center, which is not only the recognition of the company model, but also opens the capital bottleneck for the company. Take Bengbu cooperation as an example, only considering financing fees and SaaS service fees, the annual income is about 222 million, and the net profit is expected to be over 100 million. In addition, it may also bring revenue from value-added services such as supply chain collection and logistics. Win-win cooperation with local governments, the model is easy to replicate, if a breakthrough can be achieved in more than a dozen prefecture-level cities, the contribution of local government operation alone is expected to reach 1 billion.
Long-term optimistic that the company will continue to improve the industrial Internet layout
The company has a clear industrial Internet strategy and is optimistic that the company will continue to promote "transaction financial strategy", "logistics warehousing strategy" and "e-commerce data strategy". The company's current advantage lies in the industry breadth of the enterprises it serves. In the future, in-depth development can consolidate the stickiness of customer sources, enhance single-customer income and expand new business models.
Investment advice:
Optimistic about the performance driven by the rapid growth of the company's supply chain financial business, the company is expected to achieve a net profit of 0.36 billion yuan, 0.77 yuan and 133%, respectively, from 2018 to 2020, corresponding to an EPS of 0.14, 0.39 and 0.77, respectively. Due to the company's rapid growth and vast space, it is valued at PEG=1 times, corresponding to a reasonable market capitalization of about 12.9 billion in 19 years. Considering that the company is still in the early stage of accelerated performance release, a 20% discount is given, with a target market capitalization of 10.4 billion yuan and a corresponding share price of about 41 yuan.
Risk hints: financial supply-side reform is not as strong as expected; economic downturn causes supply chain risk transmission; cooperative bank support is declining; local government scale replication is not as fast as expected.