Overview of events
The company issued a performance forecast for the mid-2020 report, and it is expected to achieve a net profit of 2798.58-32.4866 million yuan in the first half of the year, an increase of 25.18%-45.31% over the same period last year.
Analysis and judgment:
The epidemic is difficult to prevent a big increase in performance, and the bank IT boom continues to verify that the company's 2020H1 performance has increased by 25.18%-45.31%, further verifying the upward logic of the industry boom. Although the epidemic in the first half of the year affected the company's software industry and integration business to some extent, the company's new orders are still optimistic thanks to the booming demand for IT upgrades from banks. There are three main factors supporting the prosperity of the industry:
1) the upgrade wave of the distributed core system of banks is under way, and the transformation of the core system leads the six major peripheral systems to follow the supporting transformation, with a total increment of more than 50 billion, which has been gradually released in 2020; 2) under the background of the game between China and the United States, self-control has become a major trend, and financial innovation has been greatly promoted, which has further brought about domestic alternative demand. 3) the investment cycle of bank IT (hardware) is 4-7 years, which has been 7 years since the last low point in 2013, and is now ushering in a new high economic starting point. In addition, considering the active output of China Construction Bank Corporation and Jianxin Jinke, which are closely related to the company, in the new cycle of bank IT, it is judged that the business increment of the company is significantly better than that of the industry, and the performance has also been significantly boosted. Bank IT upside logic is still clear, is expected to support the company's fundamentals throughout the year continue to exceed expectations.
Subsidiary Fast Reading Technology has become the overseas core agent of TikTokAds
Mobile Internet business (innovation business) was less affected by the epidemic, and the overall rapid growth trend in 2019 continued in the first half of the year. E-commerce, online reading, games and other areas blossomed, among which fast-reading technology of subsidiaries has made a breakthrough. According to Panorama, the company's wholly-owned subsidiary Kuaishuo Technology formally signed a cooperation agreement with byte jumping ByteDance, became the overseas core agent of TikTokAds, and won the overseas marketing business agency of TikTok (Douyin International Edition) and other overseas flow products in more than 150 countries and regions on five continents.
According to Sensor Tower, byte-jumping's Douyin and overseas versions of TikTok have been downloaded more than 2 billion times on App Store and Google Play around the world. The subsidiary fast reading technology won the TikTok Ads core agent qualification, on the one hand, it helps to promote the expansion of the company's overseas mobile marketing business, binds the global giant byte, shares the overseas expansion dividend and brings incremental business revenue. On the other hand, it is also conducive to combining with the company's existing financial technology business to assist customers of financial institutions to carry out diversified businesses such as cross-border e-commerce financial services and supply chain financial services in countries along the "Belt and Road Initiative" route. The imagination of business coordination is huge.
The year 2020 is not only the starting point of a new round of bank IT investment business cycle, but also the foundation year of the central bank's digital currency (DCEP). The demand for bank IT system transformation brought about by DCEP will bring transformational opportunities for the industry. In the General part of Digital currency: space and Framework based on Paper currency substitution, we believe that DCEP will bring huge demand for IT transformation and operation and maintenance mainly in the central bank side, the bank side and the public side. The bank-side system is the focus of the transformation of the digital currency ecology, and it is expected to belong to conditional bidding. For qualified bank IT service providers, the open market is huge, and it is estimated that the corresponding space of the bank-side IT system is expected to reach 93.6 billion yuan / year, and the bank IT manufacturers at the head are expected to stand out. We believe that as a first-tier competitor in the industry and a large number of large and medium-sized high-quality bank customers, the company is still expected to participate deeply in the bank-side business brought by digital currency (such as core system interface transformation, etc.). Share the dividend of technological change in the industry.
Investment suggestion
The profit forecast remains unchanged, and the company's revenue is expected to achieve 22.5% year-on-year growth of 22.5% from 2020 to 2022, and homed net profit from 2020 to 2022 will achieve a year-on-year increase of 36.4%, 29.4% and 27.2%. It is estimated that the net profit of homing from 2020 to 2022 is 1.82 billion yuan, respectively, and the corresponding EPS is 0.41, 0.53 and 0.67 respectively. The company is a fast-growing bank IT manufacturer in recent years, with strong comprehensive strength. Taking into account the upward momentum of bank IT investment, the increment brought by large banks and technology subsidiaries, and the rapid growth of mobile Internet business, the company's full-year results are expected to continue to exceed expectations and maintain a "buy" rating.
Risk hint
The competition in the industry intensified, the IT input budget of downstream banks fluctuated more than expected, the progress of the central bank's digital currency landing was not as expected, and the innovation business was not promoted as expected.
