Jiangsu state-owned assets holding ETC electronic charging industry leader

Tongxangbao is the leading enterprise in ETC electronic charging industry and the only authorized ETC issuing service organization in Jiangsu Province. According to the prospectus, the company's total number of ETC users ranks third in the country. The company's state-owned assets background blessing, the largest shareholder is Jiangsu Transportation Holdings Co., Ltd., the company is 100% controlled by Jiangsu SASAC, Jiangsu SASAC is the actual controller of Tongxingbao. The three main businesses are intelligent traffic electronic toll collection, intelligent traffic operation management system and intelligent traffic derivative business, which give play to their advantages in facilitating public travel and serving the operation of roads and bridges, and constantly enrich integrated services in vertical areas.

Basic set: benefit from the recovery of high-speed travel electronic charging business rebounded 1) ETC issuance and sales: in a leading position in the country. With the continued growth of car ownership, superimposed stock replacement and the increase in ETC transfer of used cars, ETC release sales will remain high in demand. 2) Electronic toll service: collect service fees from expressway operation and management units according to a certain proportion of tolls. With the gradual improvement of the economic trend, the traffic volume of expressways gradually returns to normal. We believe that the company's intelligent traffic electronic toll service business will show an increasing trend with the growth of traffic flow and toll amount.

High growth: with the continuous expansion of markets outside the province, SaaS business ushered in Gao Zeng. Gao Zeng took the lead in developing a series of cloud control platforms and other products in the industry, with products, services and other first-mover advantages, among which dispatching cloud products have achieved large-scale commercial operation and promoted throughout the country.

The dispatching cloud and SD-WAN networking service products provided by the company in Jiangsu Province have realized the SaaS mode to collect service fees on a regular basis. In 2022, the SaaS business revenue was 103 million yuan, an increase of 103% over the same period last year, mainly due to the breakthrough of SaaS products outside the province. The way of charging on a regular basis enhances the continuity and predictability of the company's revenue recognition, which is conducive to the stable growth of the company's business.

New opportunities: grasp the flow entrance, traffic data elements take advantage of the situation as the core target of data elements in the transportation field, have a large number of data resources, and are expected to benefit from the promotion of policies related to data elements. On the one hand, the company grasps the flow entrance of the "traffic +" scenario, collects many kinds of data resources in the process of ETC issuance and charging, and based on the ETC scenario, the company has provided customers with services such as drainage and supply chain coordination by building models and integrating products from insurance, banks and other financial institutions, and this business model has been recognized by the market. On the other hand, the company's series of cloud control platform products can achieve cloud convergence, interactive sharing and fusion of all kinds of data, with a national accumulation of more than 10 billion photos, high-quality information of millions of events and more traffic related data. With the continuous evolution of policies related to data elements, the company will enhance the processing and processing capacity of data resources, strengthen the development and utilization of traffic data elements, and accelerate the value and commercialization of data elements.

Investment advice:

Tongxangbao is the leader of ETC electronic charging industry and the only ETC issuing service organization in Jiangsu Province. In the short term, the electronic charging business is expected to pick up quickly due to the recovery of high-speed travel; in the medium term, with the gradual expansion of the SaaS model in the market outside the province, the growth of intelligent operation management system is accelerated; in the long run, as the owner of massive data in the transportation field, the company is expected to significantly benefit from the open operation of data elements. It is estimated that the operating income of the company from 2023 to 2025 is 849 million yuan and 1.449 billion yuan respectively, and the net profit of returning to the mother is 289385 million yuan respectively.

For the first time, it covers the investment rating of Buy-A, with a six-month target price of 31.95 yuan, equivalent to a dynamic price-to-earnings ratio of 40 times in 2024.

Risk Tips:

ETC issuance and sales business market bottleneck risk; non-provincial business development is not as expected; data factor policy is not as expected; assumptions are not as expected.