Investment event: On August 28, the company released its 2023 semi-annual report. 2023H1 achieved operating income of 2,023 million yuan, up 17.05% year on year; net profit of 150 million yuan, up 43.05% year on year; net profit of 39 million yuan after deducting non-return net profit of 139 million yuan, up 49.47% year on year.
The company's second growth curve is strong, and the customer layout is improving. 2023H1 achieved revenue of 2,023 billion yuan, an increase of 17.05% over the previous year. The company's profit side grew at an impressive rate, with net profit of 150 million yuan, an increase of 43.05% over the previous year; net profit of 39 million yuan after deducting non-return net profit of 139 million yuan, an increase of 49.47% over the previous year. By business, benefiting from the digital transformation of the financial industry and financial innovation, the company's information technology service business maintained a growth trend, achieving revenue of 1,312 billion yuan, an increase of 21.60% over the previous year, and a share of the company's total revenue rising to 64.84%. Among them, software products and solutions maintained rapid growth, achieving revenue of 429 million yuan, a year-on-year increase of 33.30%, accounting for 21.20% of the company's total revenue; the company's business process outsourcing sector achieved revenue of 711 million yuan, up 9.50% year on year. On the customer side, the company still maintains close cooperation with major banks. 2023H1's revenue from core customers accounts for 78.26% of the company's total revenue. Among them, the company's revenue from the six major state-owned banks accounts for 59.96% of total revenue, up 16.55% year on year; revenue from 12 joint-stock commercial banks accounts for 18.30%, up 25.34% year on year. At the same time, the company is actively accelerating penetration into small and medium-sized banks, non-bank financial institutions, and non-financial institution customers (focusing on government agencies and central enterprises). In the first half of 2023, the company added 23 new customers, including 5 small to medium banks, 12 non-bank financial institutions, and 6 non-financial institutions. The overall customer layout is improving.
Cash flow and repayment have improved markedly, and R&D investment has enhanced product strength. At the cash flow level, the cash received by 2023Q2 company from selling products and providing labor services was 951 million yuan, an increase of 33.09% over the previous year, and cash flow repayment improved markedly. In terms of R&D, the company has continued to increase investment in recent years. 2023H1 invested 195 million yuan in R&D, an increase of 21.17% over the previous year, accounting for 9.64% of total revenue. Among them, the company's self-developed PanGeng test cloud platform integrates hardware management, data management, and automation capabilities to meet various testing needs; the centralized operation platform introduces artificial intelligence algorithms, RPA, and NLP technology to establish various enterprise-level capability centers, and realizes centralized capabilities and service sharing; centralized management and resources.
The long-term growth momentum of the industry is sufficient, and the company is expected to enter a new level. The wave of digital transformation of banks is on the rise, and financial credit creation has been accelerated comprehensively under policy guidance, and has become the core driving force for the financial IT industry to maintain rapid growth over a long period of time. According to the IDC report, the IT solutions market size for China's banking sector was 64.88 billion yuan in 2022, an increase of 10.1% over the previous year compared to 58.93 billion yuan in 2021. The company has been deeply involved in the banking IT industry for a long time. Under the two-wheel drive of digital transformation and financial innovation, the company is expected to achieve high-quality development in the future.
Investment suggestions: We predict that the company's revenue for 2023-2025 will be 44.88/54.44/6537 billion yuan respectively, and the net return profit will be 358/48/574 million yuan respectively. The corresponding PE will be 26/20/16 times, respectively, and maintain the “buy” rating.
Risk warning events: business development falls short of expectations, slow policy progress, etc.