The company is a leading financial IT integrated service provider in China, mainly providing information technology services and business process outsourcing services to financial institutions dominated by banks. In the first half of 2003, the company's revenue reached 2.02 billion yuan, with information technology services and business process outsourcing accounting for 64.8% and 35.2%, respectively. The coordinated development of these two plates and a high degree of consistency of customers have formed a relatively complete service supply chain.

Information technology services are the main driving force for the company's future development, and the company's revenue growth has continued to lead in the banking IT industry since 2019. In the first half of 2023, the revenue from information technology services reached 1.31 billion yuan, an increase of 21.6 percent over the same period last year; the amount of contracts executed reached 7.787 billion yuan, an increase of 38.8 percent over the same period last year, laying a solid foundation for the company's sustained and steady development in the next two to three years. In the future, customers'R & D investment in Xinchuang, data elements, artificial intelligence and digital RMB is expected to bring new growth points to the company's information technology service business. The company announced in June 2023 that it intends to issue convertible bonds to non-specific targets, raising no more than 1.13 billion yuan (including issuance fees) for Pangeng test cloud construction project, financial digital solution research and development and iterative project, digital intelligence innovation technology center construction project and supplementary liquidity. We estimate that the revenue growth rate of information technology services from 2023 to 2025 will be 24.5% 20.3% 20.7% respectively.

Business process outsourcing is the ballast stone of the company's operation and development. The compound growth rate from 2016 to 2022 was 14.6%. In the first half of 2023, the revenue from business process outsourcing reached 710 million yuan, an increase of 9.5% over the same period last year. This is mainly due to the current residents' low willingness to spend, and the impact on banks' credit card consumption, credit card installment and other businesses, affecting customer service and digital marketing business. According to the company announcement, the order reserve of this product line is improving at present, and the revenue side is expected to see a significant improvement in the fourth quarter. Business process outsourcing forms a strong business stickiness between the company and customers, and plays an important role in understanding customer business logic and accurately grasping customer software development requirements. We estimate that the revenue growth rate of business process outsourcing in 2023-2025 will be 5.2%, 9.5% and 9.7%, respectively.

The company's customer strategy is to consolidate the core banking base and break through other customers with general products and solutions. The demand of large state-owned banks and joint-stock banks is stable and the repayment is timely, so the company always regards the six state-owned banks as its main business object, and vigorously expand the joint-stock banking business. From 2016 to the first half of 2023, the revenue share of core customers remained at around 80%. With the improvement of the standardization of the company's products and solutions, the company also accelerates its penetration to small and medium-sized banks, non-bank financial institutions and non-financial institutions (focusing on government agencies and central enterprises) based on centralized operations. It is also expected to open up new market space through mergers and acquisitions, product innovation and other ways in the future.

From 2023 to 2025, we expect the company to achieve operating income of 43.1 million yuan, an increase of 17.4 percent over the same period last year, an increase of 16.7 percent, 17.3 percent, and an estimated net profit of 3.5 picks 4.2 / 500 million yuan, an increase of 27.6 percent, 17.3 percent and 20.4 percent. The current share price of the company corresponds to 23.1x, 19.7x, 16.3x. We use the price-to-earnings ratio method for valuation, select three financial IT comparable companies, give the company a valuation of 29 times PE in 2023, with a target price of 23.23 yuan per share, covering for the first time and giving a "buy" rating.

Bank IT investment is not as expected; industry competition aggravates the risk; capital raising is not as expected; senior executives and major shareholders reduce the risk.