This report is read as follows:
Digital RMB pilot accelerated, payment terminal shipments are expected to increase, data products are infiltrating to more industries.
2020Q2 confirms the inflection point of net profit and valuation expansion is continuing. Maintain the "overweight" rating and raise the target price to 31 yuan.
Main points of investment:
Maintain the "overweight" rating and raise the target price to 31 yuan. With the acceleration of the pilot project of digital RMB, the shipments of payment terminals are expected to increase, and data terminals are accelerating their penetration into transportation, medical care, manufacturing, food, energy, electricity and other fields. The adjusted net profit from 2020 to 2022 is 2.20,3.26 (+ 0.26) and 3.98 (+ 0.28) billion yuan respectively, and the corresponding EPS is 0.68,1.01,1.23 yuan respectively. Taking into account the acceleration of the pilot of digital RMB, the target price will be raised to 31 yuan (+ 7.64 yuan 33%), corresponding to 46xPE in 2020 and 33xPE in 2021, maintaining the "overweight" rating.
The trial of digital RMB has been accelerated, and financial technology has ushered in a new round of valuation expansion. Since 2020, first, DCEP conducted an internal test in Agricultural Bank Of China in April, and then in July, it began to pilot in C-end Internet enterprises such as DiDi Global Inc., Meituan, Bilibili Inc., and then recently, with the emergence of the function of digital wallet in the APP of CCB, the pilot of digital RMB is gradually accelerating, and the scope of the pilot is also gradually expanding.
The digital RMB is not only one of the underlying innovations in the financial technology field, but also one of the core driving forces of the industry's current round of valuation expansion. With the follow-up digital RMB pilot to a wider range of pilot, the development of the industry will usher in a substantial positive. As an important part of digital RMB circulation, intelligent POS will benefit greatly in the future upgrading.
Earnings inflection points are being cashed in, and valuation gains are continuing. In our June 20 report, we believe that the company's earnings inflection point drives valuations higher. According to the semiannual report, the company's 2020Q2 single-quarter revenue increased by 99%, the return net profit increased by 85%, and the growth rate of revenue and net profit was significantly higher than that of 2020Q1. The forecast of the profit inflection point in 2020 is being fulfilled, and the logic of valuation improvement is continuing.
Catalyst: get big customer orders and new product launches
Core risks: exchange rate fluctuations, increased competition, higher-than-expected epidemic development