Multi-party layout, insurance IT leader: Established in 1994, Xinzhi Software is a leading software outsourcing service provider in China. Its main business includes IT solutions, IT operation and maintenance services to end customers in financial institutions such as insurance companies, banks, and other industries, as well as software project subcontracting services to first-level software contractors. After 26 years of accumulation, Xinzhi Software's technical service solutions enjoy good brand recognition in terms of product functionality and technical performance. As of December 31, 2019, Xinzhi Software provided channel and management IT solutions to 43 of 91 domestic life insurance companies, provided channel and management IT solutions to 26 of the 88 domestic property insurance companies, and provided IT solutions such as payment and clearing systems, credit card systems, intermediary business systems, financial risk control warning and monitoring, financial market valet transactions, etc., to more than 30 joint stock banks, with significant market segmentation leadership.
The development prospects of the outsourcing and insurance IT market are optimistic: In recent years, the Chinese government has attached great importance to the development of the software and information technology service industry, listed the software and information technology service industry as a strategic emerging industry in the “13th Five-Year Plan” plan, and issued a series of documents to establish a favorable policy environment for the development of the software and information technology service industry. According to data from the China Service Outsourcing Research Center (COI) of the Ministry of Commerce, in 2019, Chinese enterprises undertook service outsourcing contracts amounting to 1,599.1 billion yuan and execution amount of 1,069.57 billion yuan, up 18.60% and 11.50% respectively over the previous year. The execution amount exceeded trillion yuan for the first time, reaching a record high. Furthermore, according to IDC's forecast, the IT solutions market size of China's insurance industry will reach 20.474 billion yuan by 2023, and the compound growth rate from 2019 to 2023 is 22.8%. The market size will continue to grow rapidly, and the development prospects are broad. As a domestic software outsourcing and insurance IT leader, the company will benefit from the favorable development trend of the industry.
Investment advice: The company's revenue from 2020 to 2022 is estimated to be 1,084 million, 1,279 and 1,471 million yuan respectively, and the net profit of the mother is 0.81, 116 and 145 million yuan respectively. If no more than 45.5056 million shares are issued according to the company's prospectus, and the total number of shares after issuance does not exceed 182 million shares, the corresponding EPS is 0.45, 0.64, and 0.80 yuan/share, respectively.
Risk warning: The risk of a rapid rise in labor costs, the risk of gross margin being lower than the risk of the same industry, and the risk of loss of bad debts in accounts receivable.