The company released semi-annual report: 2023H1 achieved operating income of 483 million yuan, an increase of 7.91% over the same period last year, and net profit of 52 million yuan, an increase of 17.37% over the same period last year; deducting 49 million yuan of non-return net profit, an increase of 19.55% over the same period last year.

Comments:

Steady growth in performance and firm investment in research and development. The revenue side grew steadily, and 2023H1 achieved operating income of 483 million yuan, an increase of 7.91 percent over the same period last year. From the perspective of subdivided products, the operating income of IT operation and maintenance services and the original factory's software and hardware products were 291 million yuan / 185 million yuan respectively, an increase of 7.67% over the same period last year. The profit end grew rapidly. 2023H1 achieved a net profit of 52 million yuan, an increase of 17.37% over the same period last year. 2023Q2, the company achieved a net profit of 26 million yuan, an increase of 24.26% over the same period last year. The cost structure remained stable and continued to strengthen R & D investment. 2023H1's sales expense rate / management expense rate / R & D expense rate was year-on-year + 1.27pct/-1.45pct/+0.39pct, of which the amount of R & D expenditure increased by 17.26% compared with the same period last year.

Bank IT investment continues to grow, and financial innovation accelerates its landing. According to IDC data cited by the China Business Intelligence Network, Bank of China Ltd. 's IT investment reached 144.567 billion yuan in 2022, an increase of 8.3 percent over the same period last year, and is expected to reach 221.276 billion yuan in 2026, with an annual compound growth rate of 11.2 percent. In 2022, Xinchuang extends from the party and government to the industry, and finance is the representative of Xinchuang in the industry. In July 2023, the bidding network issued a tender announcement for the shortlisted procurement project of the general infrastructure integrator of China CITIC Bank Corporation Co., Ltd., with an equipment purchase amount of more than 6.5 billion yuan, confirming the magnificent demeanor of the financial Xinchuang racetrack.

Sitting on a high-quality source of customers, full coverage of technical capabilities. Customer group coverage: as of 2023H1, the company has established business cooperation with the people's Bank of China, China Development Bank, Agricultural Development Bank of China, 6 large state-owned commercial banks, 11 national joint-stock commercial banks, more than 150 urban commercial banks, private banks, rural commercial banks, rural credit cooperatives and other customers, serving more than 1000 customers. In terms of technical capabilities:

As of 2023H1, the company has obtained 16 patents (including 14 invention patents), 108 computer software copyright and 49 software product certificates; in the IT infrastructure layer, the company has multi-brand, cross-platform coverage technology capabilities such as server, storage, network, operating system, database and middleware. When the customer IT infrastructure is transformed to the Xinchuang product architecture, the company can ensure the safe, stable and efficient operation of the customer Xinchuang product architecture and ensure the rhythm of the customer Xinchuang.

Investment advice: taking into account the weak economic recovery and the pace of financial innovation in the future, we estimate that the operating income in 2023-2025 will be 17.68 million yuan and 2.141 billion yuan, with a corresponding growth rate of 33.5%, 21.1% and 17.4%, respectively (the original forecast for 2023-24 is 17,772.046 billion yuan). The net return to the parent is 174pm, 222200,000 yuan, with a corresponding growth rate of 22.9%, 27.9% and 20.9% respectively (the original forecast for 2023-24 was 1812008m). With reference to the valuation level of the comparable company, the company was given a "recommended" rating of 34 times PE in 2023, corresponding to the target price of 59 yuan.

Risk tips: market competition risk; market expansion risk; market product iteration and scientific and technological innovation risk.