What happened: the company and Beijing Intel reached a capital injection agreement with Changchun Financial Holdings and Changchun Jingyue, agreeing to subscribe for about 6.45% and 4.84% of Beijing Intel's expanded registered capital at a cost of 400 million yuan and 300 million yuan, respectively.
Yanyun DaaS promotes new infrastructure and high growth of smart city business. The company's smart city business 2020H1 achieved revenue of HK $150 million, an increase of 69.8% over the same period last year. With the help of Yanyun DaaS, universal API can be used to realize data connection without source code, which greatly improves project efficiency and shortens project cycle. Project orders are expected to double this year. In addition, the company implements the urban CTO deep ploughing model, the initial gross profit margin of the business is relatively low, but the cost of the program landing will gradually decrease with the speed of landing, and the business gross profit will gradually increase.
The core technology empowers the wisdom of the supply chain business, and the wisdom of urban trade is upgraded. Relying on the "supply chain + big data + AloT" strategy and cloud service platform, Kejie has seized the opportunity of the epidemic to actively expand the areas of online education, medical supplies and e-commerce for daily life, and achieve rapid growth against the trend. The signing scale has increased by more than 60% compared with the same period last year. On the other hand, the high degree of cooperation with the smart city and underlying big data technology Yanyun DaaS helps Kejie's business layout in the fields of 5G base station equipment, new energy equipment, electronic components manufacturing and so on. Kejie in the "618 Shopping Festival"
During the period, orders increased by nearly 50% compared with the same period last year, and orders are expected to grow by more than 30% for the whole year.
The financial IT industry is booming, and technological advantages contribute to steady growth. The company's distributed banking core system Sm@rtEnsemble as an independent controllable banking trading system, the demand may increase. Shenzhou Information uses its core competitiveness to provide end-to-end solutions, which will be further expanded. 2020H1's financial technology business has increased significantly by 35.9% compared with the same period last year, and we expect the company's banking IT business company to continue to grow steadily in the next three years.
Valuation and rating: the company's bank IT business is the core system leader, giving the company bank IT business 45 times PE in 2020, with a market capitalization of more than 17 billion RMB. The corresponding market value of the shares held by China Holdings is 6.9 billion yuan, corresponding to a valuation of about HK $8.66 billion. Changchun Financial Holdings and Changchun Jingyue injection of Intrea, the key technology of the core business Yanyun DaaS may make considerable progress, repair a number of company core business valuations, many of the company's high growth. Give 45 times PE to smart supply chain and smart city business in 2020, with a total market capitalization of about HK $4.32 billion. Under the new infrastructure and Xinchuang, the company has considerable room for long-term expansion. We estimate that the company's total market capitalization in 2020 will exceed HK $12.98 billion, with a corresponding target price of HK $7.76, giving a "buy" rating for the first time.
Risk tips: Sino-US trade friction, macro-environmental instability risk; bank IT competition aggravating risk; new infrastructure policy change risk; China information account period risk and so on.