The company is the bank IT leading enterprise, the main business transformation effect is remarkable. In 2018, Runhe Software achieved an operating income of 2.038 billion yuan, an increase of 26.41% over the same period last year, and a net profit of 314 million yuan, an increase of 26.05% over the same period last year. The company's revenue growth has been accelerating in the past three years, and the growth rate of net profit has been maintained at about 30%, with a strong upward momentum. From the perspective of revenue structure, the company's financial technology business accounted for 64.92% of the company's total revenue in 2018, gradually becoming the company's largest business segment.
Many factors help the banking IT industry to maintain high growth. Information security, major regulatory trends, open financial regulation, technological innovation and other factors actively promote the development of the banking IT industry. According to IDC forecast, by 2023, the market size will reach 107.15 billion yuan, with an annual compound growth rate of about 20.8%. On August 22, 2019, the central bank issued a top-level planning document on financial technology, adding bricks to the accelerated development of the banking IT industry from the development goals, opening up banks, technology applications and other levels.
Strategic cooperation with Ant Financial Services Group to build a new ecology of financial IT. Ant Financial Services Group's advantages in the field of IaaS and PaaS complement each other with the company's application in SaaS and banking business, and jointly promote the transformation from traditional banks to digital banks. The division of labor and cooperation is mainly carried out from three levels: first, the delivery and implementation of ant products will help to expand the company's business scope; second, the two sides jointly develop a "new generation of distributed financial core system". Promote the transformation and upgrading of the company from project services to technology operation services; third, to provide mutual fund business operation platform for small and medium-sized banks to promote the breakthrough of the company's financial technology operation business.
In-depth cooperation with Huawei Hayes is expected to achieve a leading position in the Internet of things industry. On the one hand, the company has full-stack chip-level capabilities and is deeply involved in the research and development of Hayes series chips; on the other hand, the company maintains long-term and in-depth cooperation with Huawei in the field of artificial intelligence and Internet of things, and obtains investment from Huawei. The combination of "run and + Huawei" is expected to achieve synergy, promote the development of the Internet of things and achieve industry leadership.
Company profit forecast and investment rating: the company is a leading enterprise in bank informatization and is optimistic about the performance growth brought by the new generation of distributed financial core system and the layout of the Internet of things. We estimate that the return net profit of the company from 2019 to 2021 is 398 million million yuan, 496 million yuan, and the corresponding EPS is 0.50 yuan 0.62 yuan, respectively.
The current stock price corresponds to 2019-2021 PE value of 32-26-21 respectively. Give a "recommended" rating.
Risk hint: the uncertainty of the competition pattern in the industry; the company's new product development is less than expected risk.