Introduction to this report:
The company is a leader in ETC distribution and data elements. ETC charges are the company's stable cash flow business, and the basic market is stable.
Data elements are developing rapidly, and data elements that have settled in the company's business have a lot of room for imagination to be realized in the future. Key investment points:
First coverage, “added” rating, target price 27.18 yuan. The company is a leader in ETC operations and data elements. EPS is expected to be 0.59, 0.72, and 0.94 yuan in 2023-2025, respectively. Taking into account the average value of PE and PB valuation methods, the company's target price is 27.18 yuan, corresponding to 37.83 times PE in 2024. It was covered for the first time, and the rating “increased”.
ETC issuance and charging are the firm foundation of the company. The company is the ETC issuer of Jiangsu State-owned Holdings. The ETC business mainly includes issuance and liquidation. Among them, ETC distribution has entered a period of steady development after a rapid increase in policy catalytic penetration in 2019. Future increases are related to new car sales and used car transactions, and ETC 2.0 may become an upward driving force. ETC has a stable business model for collecting service fees, with almost no marginal costs, and is a stable source of cash flow for the company.
Software development and derivative business are the company's main growth points. The company's main growth points are software development business and ETC derivative business. Software development is growing rapidly within the province thanks to a strong state-owned capital background, and projects outside the province continue to be implemented. The derivative business also revolves around ETC. Currently, the truck ETC scenario is the most promising growth point. It is expected that future software development and derivative business will contribute to continued business growth for the company.
The traffic data elements in the company's hands are expected to be revalued. On December 15, the National Development and Reform Commission issued the “Data Elements ×” Three-Year Action Plan (2024-2026) (Draft for Comments), which specifically mentions transportation and smart cities. As an ETC operator, the company has reached 23.58 million ETC users. The user coverage area has spread across 30 provinces and cities across the country, and has accumulated a large number of traffic data elements. There is great room for imagination in the future in the field of data element monetization.
Risk warning: Data element policy progress falls short of expectations; policy risk; business outside the province is blocked.