恒生电子(600570):咬定青山不放松 高产品化率构筑核心竞争力

Hang Seng Electronics (600570): Seize Aoyama, Not Relax, Build Core Competitiveness at a High Commercialization Rate

長江證券 ·  Jan 31

Weekly Securities IT Industry Review: The industry is driven by both supply and demand. The securities IT industry has been developing for more than 20 years during the same period, and the growth factors come from both supply and demand. On the demand side, the financial industry's demand for IT system upgrades can be mainly divided into passive demand brought about by loosening the macroeconomic environment, changes in regulatory rules, innovation in the financial system, credit innovation policies, etc., and active demand brought about by increased downstream profitability. The huge trading volume brought about by the bull market will spawn the downstream industry's demand for IT system upgrades (passive demand), while the increase in downstream profitability will directly increase the willingness of institutions to invest in IT (active demand). On the supply side, the supply-side drive of the securities IT industry mainly comes from advances in technology. Whether it is the huge trading volume brought about by the booming development of the capital market or the demand for transformation of the existing system after financial system innovation, it is necessary to rely on technology supply to solve it. In the same period, the more factors resonating between supply and demand, the greater the momentum for the development of the industry.

Core conclusion of the review: The winner is king. Long-term victory requires rapid response to changes in downstream demand. For securities IT service providers, the development of the industry to a certain stage is accompanied by a new cycle of system renewal. In order to stabilize the position of the industry, it is necessary to respond quickly to the evolution of the needs of downstream institutions in the changing industry. The development history of the securities IT industry proves that when there is demand for industrial upgrading, timely commercialization ability is a test of life and death for suppliers: the winner is king; companies that successfully launch and launch products will become leaders in the new pattern, and companies that have not completed corresponding commercialization in a timely manner will withdraw from the historical stage. At the same time, the securities industry is highly sticky to third-party IT vendors, and once cooperation starts, they do not change suppliers frequently, so companies that complete commercialization first can simultaneously form solid barriers to competitors in terms of product strength and customer relationships.

The company's core competitiveness: Adhere to commercialization as the guide and master the correct commercialization methodology Hang Seng Electronics' core competitiveness may lie in its adherence to commercialization orientation. We summarize that the commercialization process in the securities IT industry has a classic methodology: keenly find customer needs, form solutions to complete customer implementation as quickly as possible, and continuously receive feedback, polish their products, and quickly launch a brand. Looking back at the historical evolution of Hang Seng Electronics, its strong commercialization capabilities are mainly supported by the following points:

1) Attach great importance to research and development: continue to maintain technological leadership in order to quickly complete the implementation of solutions after discovering needs. 2) Deep binding of benchmark customers and rapid iteration: Benchmarking customers can help the company continue to polish products and complete commercialization, while forming barriers to other companies with excellent product capabilities. 3) Increase market share by replicating products horizontally: After completing commercialization, the company began replicating with customers in central China to build a brand effect while increasing market share. Hang Seng's historical endowment makes it far ahead of its peers in commercialization, while the high commercialization rate creates Hang Seng's high market share and bargaining power, and creates a deep moat for Hang Seng, making the company have strong bargaining power.

The Xinchuang+ digital intelligence upgrade is driving the advent of a new replacement cycle. As an industry leader, the company may take advantage of the trend. The driving factors of the industry at this stage mainly come from the replacement demand brought about by the Xinchuang policy and the upgrade demand brought about by digital intelligence. As Xinchuang enters the deep-water zone+digital intelligence upgrade to a new stage, we believe the industry is in the early stages of a new round of explosion. As the unquestionable leader in the industry, Hang Seng Electronics actively lays out in the new round of industry upgrading, responds flexibly to changes in the industry, and may enjoy a new round of industry dividends.

Risk warning

1. Downstream demand falls short of expectations due to declining capital market prosperity; 2. AI technology implementation falls short of expectations.

The translation is provided by third-party software.

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