The core goal of smart people's livelihood is to build a one-card system for residents' services

Desheng Technology is the only A-share listed company focusing on the social security and people's livelihood industry. With more than 20 years of experience in government services in the social sector, the company has now formed two major commercial closed loops around the “Residents' Service Card” and “Residents' Data”. The construction of the One Card provides a scenario for data development, and the data operation enhances the value of the Card, and the two promote each other. As third-generation social security cards enter the peak replacement period, the number of new cards issued is increasing day by day. At the same time, since the iterated social security card chip has sufficient space capacity, it can access more functions and superimpose digital yuan to achieve one-card use. According to data from the Ministry of Human Resources and Social Affairs, by the end of 2022, the number of third-generation social security card holders reached 267 million, an increase of 93.48% over the previous year. There is still huge market space for issuing more than 1.1 billion third-generation cards. In 2022, the company issued about 36 million cards throughout the year, and sales revenue increased by nearly 64% year on year. The company's third-generation card market share has always maintained a leading position in the industry.

Benchmarking cases are replicated and promoted. People's livelihood data operations are building a new growth pole, and there is an urgent need to improve public employment service capacity. In July 2022, the Ministry of Human Resources and Social Affairs announced 20 model cities to improve public employment service capacity, ushering in nearly 2 billion employment service construction in 20 cities. Desheng Technology is expected to benefit from complete solutions and rich project experience. The “Bijie City Full-Caliber Labor Big Data Analysis and Application Platform” built by the company is the country's first digital urban and rural employment service platform based on “big data+Internet operation”. It has been highly recognized by the government and will be replicated and promoted in the national market.

With the implementation of 20 pieces of data, the data element market has been activated, and the company's years of accumulation in standardized data trading products have also ushered in huge development opportunities. Currently, the company has formed standardized data transaction products in the fields of urban employment analysis, government business verification, and personal credit certification. Based on the various scenario applications of the One-Card, combined with various livelihood data applications such as employment services and identity verification, a complete closed loop of “data precipitation”, “data development”, and “data operation” is formed to empower people's livelihood security services with data products and operation services.

Investment advice:

Desheng Technology is a leading comprehensive operating service provider for people's livelihood in China. It has benefited from the peak of third-generation social security card exchanges in the short term and strengthened the data element market in the medium to long term. With years of data accumulation in the field of social security and people's livelihood, the social data operation business is expected to open up room for growth. The company's revenue for 2023-2025 is estimated to be 1,560/21.75/2,748 billion yuan, respectively, and net profit to mother of 1.93/2.74 billion yuan, respectively. For the first time, an investment rating of Buy-A was given. The target price for 6 months was 26.70 yuan, which is equivalent to a dynamic price-earnings ratio of 30 times in 2024.

Risk warning:

The progress of third-generation social security cards fell short of expectations; the operation and development of social big data fell short of expectations; market competition intensified; and the implementation of data element policies fell short of expectations.