Bank IT takes the lead, maintaining a "buy" rating

In the first three quarters, the revenue structure of the Company was further optimized to promote the continuous improvement of profitability. The company has sufficient order reserves in hand to lay the foundation for subsequent growth, while insisting on R & D investment to drive long-term development. We maintain the profit forecast unchanged. It is estimated that the net profit of parent company from 2023 to 2025 will be 3.50, 4.41 and 555 million yuan, EPS will be 0.79, 1.00 and 1.26 yuan, and the current stock price will correspond to PE of 23.6, 18.7 and 14.9 times, maintaining the "buy" rating.

Event: The company released the third quarterly report of 2023, and the business scale maintained steady growth. In the first three quarters of 2023, the company realized revenue of RMB 3.123 billion yuan, with a year-on-year growth of 15.36%, and realized net profit of RMB 249 million yuan, with a year-on-year growth of 32.08%. In the third quarter, the company realized revenue of RMB 1.099 billion yuan, with a year-on-year growth of 12.37%, and net profit attributable to parent enterprises of RMB 99 million yuan, with a year-on-year growth of 18.25%. The Company actively grasped the opportunities of digital transformation of banking industry and financial innovation development, and its business scale continued to maintain a steady growth trend.

Optimize revenue structure and improve profit level

(1) In terms of business, the information technology service sector realized revenue of RMB 2.047 billion yuan in the first three quarters, with a year-on-year growth of 20.46%, among which the revenue of software and digital transformation services, software products and solutions was RMB 1.243 billion yuan and RMB 681 million yuan respectively, with a year-on-year growth of 20.28% and 25.82% respectively; the revenue of business process outsourcing sector was RMB 1.075 billion yuan, with a year-on-year growth of 6.74%. The Company adhered to the productization strategy, and the revenue proportion of software products and solutions continued to increase, which has become the core engine of the Company's growth. (2) In the first three quarters, the gross profit rate and net profit rate of the Company were 23.68% and 7.97% respectively, increasing by 1.07% and 1.01% respectively compared with the same period last year. The Company's productization strategy promoted the profit level to continue to improve. In the first three quarters, the company's sales, management and R & D expense rates were 1.60%, 3.25% and 9.60% respectively,-0.12,-0.16, and +0.48% year-on-year respectively, and the overall expense rate level was relatively stable.

Order reserve is sufficient, R & D drives development

As of June 30,2023, the contract amount of the information technology service sector of the Company has been RMB 7.787 billion yuan, with a year-on-year growth of 38.84%. Sufficient orders in hand lay the foundation for the subsequent growth of the Company. The company adheres to the route of R & D-driven innovation and innovation-driven growth. In the first three quarters, R & D investment was 300 million yuan, up 21.54% year-on-year. At the beginning of 2023, the Company officially established Beijing North Research Institute, focusing on advanced technologies such as AI and big data, continuously improving product incubation capability and product standardization capability, and the competitiveness of the Company is expected to continue to improve, driving the long-term development of the Company.

Risk hint: policy promotion is not as expected; bank IT investment is not as expected; order landing is not as expected.