Key points of investment:
First coverage, “added” rating, target price 22.01 yuan. The company's EPS is expected to be 0.77, 0.95, and 1.21 yuan in 2023-2025, respectively. Considering the PE and PS valuation methods, the company's target price is 22.01 yuan, corresponding to 23.27 times PE in 2024. The first coverage and “increase in holdings” was achieved.
A leading banking IT company, the business structure continues to be optimized. The company is a leading IT integrated service enterprise in domestic banks. Starting with computer hardware sales, the company has gradually completed the business transition from BPO to ITO in recent years. Its main business includes the information technology service sector and business process outsourcing.
Among them, the outsourcing business is the basic platform for the company's operation and development, and software products and solutions are the arrow for the company's entry into the bank's IT circuit and future development breakthroughs. The high-margin software business is growing rapidly, its share is constantly increasing, and the company's business structure continues to be optimized.
Banks' IT investment is still being supported, and industry competition is intensifying. In recent years, bank IT system construction urgently needs to improve the ability to independently control core technology. The pace of construction has gone from edge to core, and has now entered an aggressive stage, supporting the continued growth of the banking IT solutions market. CCI predicts that by 2026, the scale of the industry will reach 139.011 billion yuan, and the CAGR will reach 23.55%. However, the competitive pattern of the industry still shows “large dispersion and little concentration”. Competition in the industry is intensifying, and the overall profitability of the industry is under great pressure.
Effective management is the way to break the game. The profitability of the industry is determined by three factors: customer order price, labor costs, and management capacity. The company actively seeks new customers to increase customer unit prices, and personnel costs are relatively stable. With the cooperation of efficient management, the revenue and cost gap will continue to be released in the future, and the company's profitability is expected to exceed expectations.
Risk warning: Banks' IT investment is falling short of expectations; labor costs are rising; competition is intensifying