The only ETC distribution service agency in Jiangsu Province, with steady growth in performance
The company is a leading supplier of smart transportation platform-based solutions for highways, arterial highways, and urban transportation in the country. The controlling shareholder is Jiangsu Communications Control, and the actual controller is the Jiangsu State-owned Assets Administration Commission. The company is mainly engaged in the following three areas of business: 1) smart traffic electronic charging business using ETC as the carrier, including ETC distribution and sales, electronic toll service business, etc.; 2) smart traffic operation management system business using cloud technology as a platform, including system software development, comprehensive solutions and system technology services; 3) smart transportation derivative business, which mainly uses “ETC+” as the core to develop ecological scenarios, integrating vehicle refueling, road economy, vehicle maintenance, and ETC ecosystem business. The company's revenue increased from 280 million yuan in 2017 to 593 million yuan in 2021, and net profit to mother increased from 50,1771 million yuan to 188 million yuan. In addition to ETC promotion policies affecting significant growth in performance in 2019, the overall performance of the company showed a steady growth trend. In 2022, the performance growth rate declined due to the pandemic. In the first three quarters of 2023, the company achieved revenue of 452 million yuan, a year-on-year increase of 24.82%, and achieved net profit of 155 million yuan, an increase of 45.39% over the previous year, returning to a positive growth trajectory.
Electronic billing business: ETC+ ecosystem expands life scenarios, used+equipment replacement+front installation broadens market space
Smart transportation electronic billing business: 1) ETC distribution and installation business: New and used vehicle sales and ETC expiration replacement requirements broaden the company's business space. As the only ETC distribution service agency in Jiangsu Province, the company combines a strategic cooperation model with Internet distribution to enhance its monopoly advantage within the province and expand markets outside the province. In 2022, the company developed 1.28 million ETC users, accounting for 9.3% of the 13.7 million new ETC users nationwide. 2) Electronic billing business: The company's electronic billing amount grew rapidly, from 15 billion yuan in 2017 to 39.4 billion yuan in 2022, with a compound growth rate of 21%. Affected by the economic recovery and rapid increase in traffic, the electronic toll service is expected to rise steadily; the ETC+ ecosystem continues to be developed, and the business covers scenarios such as parking and refueling, and the electronic toll business ushered in a new growth point.
Operation management business: Combined with AI to continuously enrich product content, the SaaS model brings new revenue support
Operation management business: Focus on the three business scenarios of smart traffic command and dispatch, operation services, and comprehensive management to form “scheduling, charging, maintenance, service, integrated management, digital intelligence” six major product systems, and more than ten smart transportation cloud service series products with leading domestic standards. At the same time, AI video analysis cloud control platform projects and toll robots are being built, and the products continue to be rich. The company's operation and management system has basically achieved full coverage of Jiangsu Province, and is continuing to expand markets outside the province. Some products use a SaaS revenue recognition model to reduce cycle fluctuations, revenue has risen steadily (revenue increased from 51.03 million yuan in 2021 to 103.47 million yuan in 2022), continued enrichment of new products+expansion outside the province+SAAS model, and business growth is expected to continue.
Digital elements are at the cutting edge of policy, and accumulating large amounts of traffic data has potential for monetization
Using simultaneous highway truck data and ETC distribution and installation customer data, the company has commercially operated two mature data element products: vehicle insurance agency business and supply chain collaboration business. In addition, with the support of the transportation factor policy, there is potential for monetization of the large amount of traffic factor data accumulated during the operation of the company's products: by the end of 2022, the company had 22.15 million ETC users, 1,519 smart parking lots, and an ecosystem built around ETC+, generating large amounts of data, which can provide services such as customer acquisition channels, product operation strategy optimization and risk management measures for banks, factoring companies, truck carriers, etc.; the company's scheduling cloud platform covers eight major functional modules such as video surveillance, intelligence boards, and voice, 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 intelligence board information, nearly 10 million voice call recordings, 10 million vehicle model data, and more than 8 billion high-definition snapshots. The company has a large amount of traffic data, which provides a foundation for future value and commercialization of traffic data, and is expected to become a new performance growth pole for the company.
Profit forecasting
The company's revenue for 2023-2025 is estimated to be 8.33, 10.95, and 1,349 million yuan, respectively, and EPS is 0.51, 0.66, and 0.82 yuan, respectively. The current stock price corresponds to PE 38, 30, and 24 times, respectively, giving it a “buy” investment rating.
Risk warning
The risk that the promotion and implementation of data factor policies falls short of expectations, the risk that downstream demand falls short of expectations, the risk of increased industry competition, and the risk of macroeconomic downturn, etc.