The scale of the securities industry continues to grow, bringing broad demand for IT. 1) the value of A stock market shows an increasing trend, and the securitization rate still has room to rise. By the end of October 2022, the total market capitalization of A shares was 88.7 trillion yuan, with a compound growth rate of 14.05% since 2013. The turnover of unilateral stock base increased from a low of 101 trillion yuan in 2018 to 276 trillion yuan in 2021.
2) the number of investors continues to grow. By the end of December 2021, the number of securities investors had reached 197.41 million, representing a compound growth rate of 10.82 per cent since 2016. 3) favorable policies are frequently introduced to superimpose the continuous expansion and development of China's capital market, providing new development opportunities and space for companies that provide software and information services to the securities industry.
B-end business is steadily improving, while C-end business brings great potential for growth. 1) the company is the leading enterprise in the subdivision of stock market trading system software and maintenance service, and has obvious advantages for many years. The layout of the terminal trading system for many years, enjoys a high reputation in the industry. Compared with its competitors, it has the largest number of cooperative securities firms, serving 95 securities firms as of November 22, accounting for 90% of the total number of brokerage qualified securities firms. 2) for the securities information service business on the C side, the company has 14 versions of software for consumers to choose from, with a rich number of products with 62 functions and comprehensive coverage. at present, the average number of monthly active users on the company's mobile end is 1.7521 million, an increase of 15.87% over the same period last year, with great potential for development.
Core competitiveness: ingenious science and technology to create a good reputation, high profits lead the industry. 1) with strong technical strength and complete product system, the company has won a good reputation and stable market through continuous improvement of market and service system organization construction, customer and channel expansion and company brand construction. The company's products and services have covered more than 90% of the securities companies in the mainland. 2) through years of research, accumulation and development practice in the securities information service industry, the company has accumulated a large number of core technologies and established high technical barriers. As of 1H2022, the company has a total of 97 patents, including 93 software copyrights. 3) the company has a complete securities market trading business products and service system, with rich product structure, which can effectively meet the needs of customers at different levels. The company's product system has formed the form of "unified background, a variety of terminals", can timely and accurately feedback customer needs, and quickly form the final sales products according to market demand. 4) the company's software products and services are sold directly, and the company's sales expense rate is only 2.0% in the first three quarters of 2022, which is significantly lower than that of competitors.
We predict that the EPS of the company from 2022 to 2024 will be 2.16 pound 3.70 RMB 4.30 respectively. Using the comparable company valuation method, with reference to the adjusted average valuation of the comparable company, we give the company 2023 30.00xPE, corresponding to the target price of 110.91 yuan, covering for the first time and giving the buy rating.
Risk hint
1) the duration of the epidemic is longer than expected; 2) the growth of IT investment of securities firms is not as expected; 3) the growth rate of C-end users is lower than expected; 4) the competition pattern of the industry is deteriorating; 5) investment risk.