Company profile
Soxinda Holdings is a market operator in big data and artificial intelligence industry in China, providing enterprise customers with integrated services such as data solutions, sales of software and hardware and related services, as well as IT maintenance and support services. Based in Shenzhen, the company develops and delivers complex data solutions and focuses strategically on China's leading banks and financial institutions. According to the Frost Sullivan report, the company is the fifth largest data solution provider in southern China in terms of earnings from the financial industry in 2018, covering 55.6% of China's state-owned banks and joint venture commercial banks. Eight of China's top 15 banks based on 2018 earnings are corporate financial customers.
Sino-Thai viewpoint
China's big data and artificial intelligence solutions market has broad prospects: China's big data and artificial intelligence solutions market has shown great potential for growth since customers in the downstream industry began to apply it in 2013. Driven by government support, demand growth in downstream industries and technological progress, the market size of big data and the artificial intelligence solution industry in China grew at a compound annual growth rate of 58.7% from 2014 to 2018, according to the Frost Sullivan report. The company will actively expand its business in the future and hope to account for 100% of its financial revenue in the future. in addition, the company cooperates with the University of Hong Kong in the research of some cutting-edge technologies in artificial intelligence, as well as the application of related cutting-edge technology research in the financial field. for example, the study of financial technology machine learning, how to apply in the field of precision marketing, and risk control.
In terms of operating performance: in the 2016-2018 fiscal year and as of May 31, 2019, the company's operating income was 170 million yuan, 140 million yuan, 190 million yuan and 70 million yuan respectively, of which the proportion of related business such as the sale of software and hardware decreased from 51% to 19%. The share of data solutions business increased from 30.2% to 61.8%. The gross profit margin is 22.8%, 33.3%, 34.0% and 42.2% respectively, showing an overall upward trend, in which the gross profit margin of selling software and hardware services is about 60%, while that of data analysis solutions business is about 40%. The cost of sales is 130 million yuan, 90 million yuan, 120 million yuan and 40 million yuan respectively, which is on a downward trend The asset-liability ratio is about 27.7%, 27.6%, 80.5% and 81.3% respectively, and the company is under great pressure to repay debt; the net interest rate is 7.9%, 15.0%, 12.2% and-1.9% respectively, and the year-on-year decline in 19 years is due to listing expenses.
Valuation: based on 400 million shares after the global public offering, the company's market capitalization is HK $6 billion to HK $720 million, which is lower than that of its Hong Kong counterparts. In 18 years, the price-to-earnings ratio of the company is about 23.6-28.3 times, which is in the industry average level; the price-to-book ratio is about 3.06-3.21 times, which is higher than the industry average. In terms of profitability, the 18-year ROE and ROA were 29.4% and 14.7% respectively, higher than the industry average. Considering the large number of data solution providers in the market, the total market share of the top five market operators is only about 9.5% in terms of revenue from providing data solutions in 2018, while the company has only 0.06% market share. In addition, many competitors have longer operating history and experience, larger customer base, wider brand recognition and richer financial, technical, marketing and other resources than the company. The company's Pre-IPO stage is about 83.79% discount to the selling price and there is no lock-up period, which may fluctuate greatly on the first day. Considering the company's industry status, performance and valuation, we give it a score of 59, with a rating of "not applying for purchase".
Risk hints: (1) market competition risk, (2) contract fluctuation risk leads to income uncertainty.