Deepening the global layout, a leader in the smart terminal and billing industry. The company is a digital service provider integrating smart terminals, big data processing capabilities, and data scenario operation capabilities. It focuses on the management pain points of the government, industry, enterprises and society, and provides full-scenario digital solutions from hardware, software, business operations to data operations. The business scope covers more than 100 countries and regions around the world, and continues to export China's digital transformation solutions to countries along the “Belt and Road”.
Bill collection rates are rising or trending. According to the general situation of the industry, foreign billing rates are higher than domestic ones. Starting in the second half of 2022, there have been rate increases for some companies in the payments industry. We believe that in the future, as the domestic payment ecosystem continues to develop in compliance, it will show a more market-based trend. As a result of the tightening of payment licenses and the introduction of Document No. 259, billing institutions need to pay more compliance costs. In addition, in accordance with central bank requirements, billing institutions also need to modify or replace bank card acceptance terminals that do not meet the regulations within the time limit. The cost of machinery and equipment has increased dramatically, and the rate increase has become an option for many billing institutions to stabilize their revenue. At the same time, billing agencies need to seek new growth points to help merchants comprehensively improve their digital capabilities, integrate industrial resources, and obtain comprehensive benefits through ecological construction.
Overseas localization deployment has accelerated, and payment equipment shipments rank first in the world. According to China Network, citing Nielsen's 2022 global receipt and POS machine market situation report, the company ranked first in the world in terms of payment equipment shipments in 2022. The company continues to seize the rapid development opportunities of overseas mobile payments, actively lays out markets in Southeast Asia, Middle East Africa, Europe and the US, and further strengthens the localized deployment of overseas business. The business scale continues to grow. 2023Q1-3, overseas business revenue accounts for 74% of the cluster revenue. The company has successively set up branches in Hong Kong, Brazil, Singapore, etc., and has established several business development service centers around the world to continuously improve its localized service capabilities. It has 4 intelligent industrial 4.0 production bases at home and abroad. With high R&D investment, strong supply chain delivery, and the core competitiveness of full-scenario construction, it has provided global customers with three-dimensional full-process services and extended the payment network to all parts of the world.
The entire industry chain lays out the digital yuan and actively embraces open source Hongmeng. (1) The New Mainland has a certain market position and scale in industries such as hardware, software, and scenario operation services. Through the promotion of digital yuan and business model innovation, it will effectively connect related industries and bring new industrial space. (2) In December 2021, the company joined the OpenHarmony project group incubated and operated by the Open Atom Open Source Foundation and became a Class A candidate donor. At the same time, the company continues to maintain its market outlook and technological innovation advantages within the industry, and actively promotes the autonomous and controlled transformation process of payment terminals. The product hardware has achieved 100% localization replacement, and has completed compatibility tests on various open source OS devices, including OpenHarmony. The first batch of N910 Pro smart POS passed the China UnionPay Financial Digital Service Terminal Operating System special test.
Profit forecasting and investment advice. We believe that considering the continued recovery of offline consumption driving the growth of payment flows and the rapid development of hardware equipment overseas, we expect the company's net profit to be 10.06/12.55/ 1,507 billion yuan respectively in 2023/2024/2025, up 363.45%/24.75%/20.14% year over year, and EPS of 0.97/1.22/1.46 yuan respectively, giving 2024 dynamic PE 20-25 times, and a reasonable value range of 24.44-30.50 yuan for 6 months, maintaining “superior” to the market ” Ratings.
Risk warning. Due to changes in industry regulatory policies, the recovery of overseas machinery shipments and domestic receipt of orders fell short of expectations.