Event: recently, intensive bidding for "second-line ports" in various port areas in Hainan began. Shengshi Technology won a total of three port construction bids from July 20, 2022 to August 1, 2022, with the winning amount as follows:

97.1578 million yuan (Sanya Port Nanshan Port), 147 million yuan (Haikou Xiuying Port) and 353 million yuan (Haikou Xinhai Port and South Port), with a total amount of about 597 million yuan.

The dense landing of the "second-tier ports" opened the curtain of island closure in Hainan. In 2025, Hainan Province will launch the "island-wide customs closure". The significance of "customs closure" is to build the whole island of Hainan into a special area under customs supervision, and its concept can be referred to as: first-line liberalization, second-line control, and freedom on the island. Among them, as the respective dividing lines of foreign countries, Hainan free trade port and China's domestic market, the "first line" and "second line" are of great significance.

The "island-wide customs closure" is expected to bring high-frequency personnel and goods in and out, and the construction of intelligent ports is imminent. Innovative policies such as zero tariff and ultra-low income tax combined with "island freedom" are expected to provide assistance for goods, tourists, consumption, talent introduction and other dimensions, as the first domestic model, may challenge the comprehensive capacity of the port. According to the 14th five-year Plan, the "second-line ports" in Hainan need to have the hardware conditions for customs closure by the end of 2023 to ensure the smooth realization of "island-wide customs closure" in 2025. According to the disclosure of information on the government website, at present, there are seven projects planned for the construction of waterway ports, with a total investment of 9.288 billion yuan. There are three projects planned for the construction of aviation ports, with a total investment of 2.25 billion yuan, and it is planned to have the hard conditions for customs closure by the end of 2023. The overall construction presents "time is tight and mass is large".

Shengshi Science and Technology, as a scarce manufacturer with domestic experience in benchmarking project construction, will greatly display its skills in Hainan Island closure. Hainan port construction requires "high efficiency", "high security", "comprehensiveness", "customization" and "short construction cycle". As a scarce manufacturer with a number of benchmarking project construction experience in China, 1) take Shenzhen Bay Port, a land port in Shenzhen Special Economic Zone, as an example, this port is the first comprehensive land port in the country to implement the "co-location" inspection mode. at the same time, 24-hour customs clearance connects the Hong Kong Special Administrative region and Shenzhen, inspecting a total of nearly 420 million passengers within 13 years of the establishment of the station. The inspection of more than 4700 million entry and exit vehicles has the characteristics of "high efficiency", "high safety" and "customization", and may be highly similar to the construction of the second-line port in Hainan. 2) taking the overall solution of the company's sea, land and air multi-dimensional integrated smart port as an example, the scheme has been successfully applied to many airport ports such as Chengdu Tianfu International Airport, Jinan Yaoqiang, Qingdao Jiaodong, Haikou Meilan, Guiyang Longdongbao, as well as Nantong Lusigang Seaport Port, Mohan Railway Port and so on. Among them, the Chengdu Tianfu International Airport Port Project uses a number of innovative products independently developed by the company, which is the overall solution project with the most complete product category of the purchasing company so far, with the characteristics of "comprehensive landing". It has benchmarking significance in the application and promotion of the overall solution of the company's intelligent port inspection system.

The company adopts the non-traditional integrator model of "hardware modularization and software customization", which makes the company have the ability to land high-quality projects in a short construction cycle and meet the rigid conditions of customs closure before the end of 2023. The major domestic ports have their own unique needs, but more are "shallow customization"; at the same time, the company has formed an embedded hardware platform, hardware modular strong expansibility, through different modules can be reassembled to meet the required product specifications. The resonance between the two has further reduced the construction cycle and is highly in line with the rigid requirements of "Hainan Island closure" at the end of 2023 and "island-wide closure" in 2025. Recently, intensive bidding for "second-tier ports" in various port areas in Hainan began. From July 20, 2022 to August 1, 2022, the company won bids for the construction of three port ports, with the winning amount of 97.1578 million yuan, 147 million yuan and 353 million yuan respectively, with a total amount of about 597 million yuan. It is expected that in the future, various port areas in Hainan will continue to invite tenders intensively. Under the background of proving its scarcity ability, the company may make great efforts to close the island in Hainan.

The opening of the country is superimposed with the strategy of "going abroad and building overseas", and the prospect of the company is promising. At present, the epidemic tends to be normal, and the door of the country may be gradually opened up. Shengshi Technology, as the vanguard of intelligent ports in the industry, will be deeply involved in the whole process of epidemic control, personnel entry and exit, and goods inspection, and will highly benefit from all kinds of opening scenes. The company first promotes the intelligent quarantine inspection system, which solves the difficult problems of passenger temperature detection and precise interception for many years, realizes self-service inspection, automatic early warning interception, quickly isolates and intercepts passengers with epidemic situation, and has formed an overall solution for epidemic prevention and control. to provide a strong guarantee for weaving a solid prevention and control network and building a solid national gate security.

Sign a strategic agreement with Huawei and join forces to lay a solid foundation for "going abroad". According to the company's 2021 annual report, the 5G smart port joint solution jointly created by Shengshi Technology and Huawei has been successfully launched in a port in Oman, playing a highly scarce smart port "business card" overseas for the first time. The success of the Oman port has made it a new "benchmark" for overseas markets, which is conducive to the company's development in overseas markets. On April 28, 2022, the strategic cooperation with Huawei was signed again, and the company will combine the advantages of being the leader of the intelligent port and the advantages of Huawei ICT to superimpose the ecological resources of both sides. At the same time, the company is actively promoting a number of overseas projects, and recently announced that it intends to invest and set up a wholly-owned subsidiary in Nigeria to accelerate the company's strategic layout of "going abroad and building overseas".

Investment suggestion: in the face of more and more complex port management, the necessity of smart port construction is escalating year by year, and considering the particularity of smart port, we think that the company has obvious competitive advantage at present. And has realized the jump to the product merchant. Considering the future increment space of the market, we think that the company has a broad space for growth. At the same time, the recurrent systemic risk of the epidemic suppresses the flow of people and goods in and out of airports, ports and other ports, which is transmitted to the port information construction companies under continuous pressure. although the impact of such events cannot be replicated, it can not be ignored. the relevant effects are mainly concentrated in the first half of this year, and are expected to gradually return to the normal growth curve in the second half of this year and next year, so the relevant profit forecasts are adjusted slightly. It is estimated that the company's revenue in 22-24 years will be 15.13 billion yuan, 20.11 billion yuan, and the net profit will be 2.88 billion yuan, 3.94 billion yuan, and the current market capitalization will be 20 times that of 23-year PE, respectively.

Risk hint: the risk that the construction of the project is not as expected; the risk that the epidemic repeatedly leads to the opening of the country door is not as fast as expected.