Event Overview:
Recently, Tongbao released the “Report for the Third Quarter of 2023”. In the first three quarters of 2023, the company achieved operating income of 452 million yuan, a year-on-year increase of 24.82%, net profit of 155 million yuan, a year-on-year increase of 45.39%, and net profit of 146 million yuan after deducting non-return net profit of 146 million yuan, an increase of 50.19% over the previous year.
Q3 Net profit increased high, smart transportation derivative business expanded rapidly
On the revenue side, the Q3 company alone achieved revenue of 174 million yuan (+20.62% year-on-year), of which 1) smart transportation electronic charging business revenue was about 110 million yuan (+26.67% year-on-year), accounting for 63.08% of revenue. The company mainly increased ETC distribution and promotion efforts at offline outlets, cooperative channels and online platforms, optimized the ETC product system, and the distribution volume led to a sharp increase in ETC distribution business revenue, and increased highway traffic, driving an increase in electronic toll services; 2) Smart transportation operation management system business revenue of 1.51 100 million yuan (+7.83% year-on-year), accounting for 33.45%; 3) Smart transportation derivative business revenue was 17.027,700 yuan (+87.39% year-on-year), accounting for 3.77%, mainly because the company further increased its market expansion efforts for supply chain collaboration services and drainage services.
On the profit side, the Q3 company achieved net profit of 56.9385 million yuan (+49.01% year-on-year) and net profit after deducting non-return net profit of 56.7538 million yuan (+48.47% year-on-year). In the first three quarters, the company's consolidated gross margin was 53.16%, up 1.68 percentage points from the previous year. Among them, the gross margin of the smart transportation electronic charging business was 55.57%, up from the previous year's gross profit margin of 48.49%, mainly due to a decrease in ETC equipment purchase unit price; the gross margin of the smart transportation operation management system business was 44.25%, which remained high; and the gross margin of the smart transportation derivative business was 92.18%, up from the gross profit margin of the business of 83.04% last year, mainly due to a sharp increase in revenue from this business, mainly labor costs and relatively stable, so gross margin increased.
The card is a data element on the transportation side. Smart transportation application companies with multiple product layouts are the core target of the transportation-side data element. They have a large amount of data resources, and are expected to benefit from the promotion of policies related to data elements. Currently, the company mainly uses data elements accumulated in ETC scenarios to integrate banking, insurance, factoring and other product construction models to provide cooperative services such as customer acquisition channel expansion, product operation optimization, and risk management measures for partner institutions. This business model has been recognized by the market. Looking at the long term, the layout of data elements continues to expand, and the company holds data on all scenarios of expressways, and is expected to explore more monetization models.
In addition, the company's series of cloud control platform products can achieve cloud aggregation, interactive sharing, integration and opening of various types of data, and has high-quality information on more than one million incidents across the country and more transport-related data. This will provide strong data support for big data analysis such as road network management, travel services, road collaboration, and road transfer economy. The company's dispatch cloud platform covers eight major functional modules such as video surveillance, intelligence boards, and voice. It has now successfully connected to traffic video data portals in many provinces and cities, and has accumulated extremely rich monitoring data (road videos, road conditions, etc.) and incident cases (emergencies, inspection incidents, etc.); the platform has handled more than 600,000 traffic incidents; it has stored nearly 3 million pieces of information board information, nearly 10 million voice call recordings, tens of millions of vehicle model data, and more than 8 billion high-definition captured images, etc.
At present, comprehensive toll system software with charging, check-in, and audit functions, as well as toll robots, large digital economy screens, integrated fog lamp equipment, integrated grating model recognition machines, integrated grating model recognition machines, integrated intelligent railings, ETC antennas and controllers, and license plate recognition cameras, etc., have been formed into family hardware products that are highly compatible with them. According to the investor relations activity record table, as of the end of the first half of 2023, the solution has been piloted at 14 toll gates, including the Ninghai-Shanghai Expressway, Ningjing-Yan Expressway, Yanjiang Expressway, Suhuaiyan Expressway, Lianxu Expressway, Ninghang Expressway, and Eastern Expressway, which can greatly improve expressway toll efficiency and greatly reduce highway operation and management costs.
Investment advice
Tongbao is the leader in the ETC electronic charging industry. Benefiting from the recovery of high-speed travel in the short term, the electronic toll business is expected to recover rapidly; in the medium term, with the gradual expansion of the SaaS model in markets outside the province, the smart operation management system will accelerate; in the long run, the company, as a massive data owner in the transportation sector, is expected to benefit significantly from the open operation of data elements. It is estimated that the company's operating income from 2023 to 2025 will be 836/1,055/ 1,336 million yuan, respectively, and net profit will be 217/2.97/385 million yuan, respectively. Maintaining the buy-A investment rating, the 12-month target price is 29.19 yuan, which is equivalent to a dynamic price-earnings ratio of 40 times in 2024.
Risk warning:
There is a risk of bottlenecks in the ETC issuance and sales business; business expansion outside the province falls short of expectations; implementation of data element policies falls short of expectations.