Deeply cultivate the banking industry and empower fintech. Guided by big data, cloud computing, artificial intelligence, blockchain, privacy computing and 5G applications, the company provides customers with general software products such as PanGeng test platforms, image and process management, big data, AI artificial intelligence, basic technology platforms, etc., and can also provide financial industry solutions such as operations, channels, asset management and industry, supply chain finance and credit, risk and compliance management, digital management and innovative services. The company can meet customer needs for multi-level services including software development services, software testing services, IT operation and maintenance services, data and business processing services, digital marketing and customer service.

Revenue surpassed the 4 billion mark, and profitability continued to increase. In 2023, the company actively grasped the digital transformation of the banking industry and financial innovation development opportunities. Revenue surpassed the 4 billion yuan mark, reaching a year-on-year increase of 15.48%; net profit to mother was about 348 million yuan, up 25.44% year on year, and net interest rate increased to 8.19%; in Q1 2024, the company's revenue was 1,115 billion yuan, up 11.55% year on year, and net profit to mother was 48.53 million yuan, a decrease of 20.82% year on year.

The company continues to promote business and product structure transformation, continuously consolidate and expand the market share of core customers while exploring incremental business and incremental customers. The small and medium-sized banks and non-bank financial institutions markets, which it focuses on, have achieved rapid development. At the same time, the company is building a second growth curve around software products and solutions, and continues to increase R&D investment to enrich the product matrix.

Accelerate product refining and drive the second growth curve. As the company's first growth curve, IT services and business process outsourcing services continue to contribute to the company's steady growth in operating performance and cash flow; as the company's second growth curve, software products and solutions have become a stepping stone for the company to rapidly expand small and medium-sized banks, non-bank financial institutions, and non-financial institutions. In the process of serving customers of large state-owned commercial banks and joint-stock commercial banks, the company abstracts, refines products and solutions through multiple application scenarios, and exports them to small and medium-sized banks. In 2023, the company added 49 new customers, including 14 small and medium bank customers, 23 non-bank financial institution customers, and 12 non-financial institution customers. Along with the rapid expansion of customers, its software products and solutions achieved revenue of 935 million yuan, an increase of 24.48% over the previous year. The growth rate was leading the company's other product lines, and its share of the company's total revenue further increased to 22.04%.

Currently, the company can provide customers with general products and solutions such as PanGeng test cloud platform, big data, artificial intelligence, image and process management, basic technology platform, etc., and can also provide financial industry application solutions such as operation management systems, asset management systems, interindustry business management systems, risk management systems, and digital yuan unified access and transportation management systems for financial industries such as banking, insurance, and securities.

Financial credit innovation has entered the stage of comprehensive promotion. Large banks have invested a lot in this area in the past few years. The pace of Xinchuang is relatively leading. Some major banks have reached the final stage and have basically reached the inspection level. The overall progress of the 12 joint stock banks is about a year behind that of major state-owned banks. Credit innovation for small and medium-sized banks is currently being accelerated, and may reach its peak in 2025. Small and medium-sized banks are constrained by their own IT technical strength and management level. In terms of credit innovation, they often adopt a follow-up strategy. In the bidding process, they will focus on considering the number of cases where suppliers have delivered the same type of project in the industry. In the past, the company has accumulated rich project experience in the process of serving large banks in the credit innovation transformation process, laying the foundation for the company to expand the credit business of small and medium-sized banks.

Actively expand the application of big models in the banking industry. The company is currently actively trying to introduce large-scale model technology in the field of bank anti-fraud, asset management, and enterprise knowledge assistants and intelligent testing, and has already formed implementation cases in some client-side business scenarios. Within the company, development engineers were able to reduce costs and increase efficiency. In the field of AI big models, the company has sufficient talent reserves and technical reserves. We believe that major banks are currently embracing the implementation of big models in the financial scene. 2024 is a year of active exploration, and the company's implementation cases will help open up future AI project orders at major banks.

Profit forecasting and investment advice. The company has been deeply involved in the field of financial IT services for many years. Large state-owned commercial banks and national joint-stock commercial banks are the cornerstone of the company's steady growth, and are focusing on expanding the small and medium-sized banking industry and software products and solutions. We believe that the company has development prospects for steady growth. We expect the company's revenue for 2024-2026 to be 47.74/54.22/6.236 billion yuan, up 12.5%/13.6%/15.0% year on year; net profit to mother of 4.15/4.80/562 million yuan, up 19.4%/15.6%/17.2% year on year; EPS 0.67/0.78/0.91 yuan, respectively. Referring to comparable companies, combined with the company's development trend in the financial IT field and the customer base of major state-owned banks, the company was given 22-26 times PE in 2024, with a reasonable value range of 14.78-17.46 yuan. For the first time, coverage was given, and a “superior to the market” rating was given.

Risk warning. Demand in the financial IT sector falls short of expectations; AI technology advances and applications fall short of expectations; market competition intensifies.