Incident: On March 19, 2021, the Central State Administration issued an announcement on the transaction of the 2021 database software agreement supply and procurement project.

Among them, a total of 19 vendors were shortlisted for the first package transactional database management system; a total of 13 vendors for the second package analytical database management system were shortlisted.

The database product was successfully shortlisted in the central procurement database list, and the database localization process continues to accelerate. 1) On March 19, 2021, the central government agency issued the 2021 database software agreement supply and procurement project transaction announcement. The Kelan Goldilocks distributed memory database system was shortlisted for supply products with a final bid price of 119,000 yuan. 2) The company's Goldilocks database, which has complete independent intellectual property rights, applies advanced distributed technology to its architecture and has strong performance guarantees. At the same time, it provides flexible horizontal expansion capabilities in a cluster deployment environment to meet diverse system operation requirements. It can be applied to fields with ultra-high performance, large concurrency, and real-time data processing requirements, such as finance, telecommunications, and electricity. 3) According to the transaction announcement, a large number of domestic database vendors were shortlisted as central procurement database suppliers in 2021. The transactional database management system mainly includes 17 domestic vendors such as Shenzhou GM, Wuhan Dameng, NPC Treasury, Tencent Cloud, Kelan Software, Wanli Open Source, and Wave Information; the analytical database management system mainly includes 11 domestic vendors including Alibaba Cloud, Wuhan Dameng, Tencent Cloud, Wave Information, NPC Finance, and Shenzhou GM. 4) As one of the highest-level and broadest coverage procurement projects in the field of government procurement in China, the “Central State Agency Procurement Project” is an important procurement base for tens of thousands of agencies and units directly under the central government and a weather vane for local procurement. The current list of central procurement databases fully shows the importance and encouragement that central government agencies attach to domestic databases, which helps speed up the domestic substitution process of corporate databases in all walks of life.

A leading enterprise in the domestic IT segment of banks, the founder's genes determined that it could deeply lay out the financial IT and database fields. 1) The company is a leading bank IT solution provider in China. Judging from the development history of more than 20 years, the company has accumulated rich online technology in bank IT, and is highly forward-looking in R&D. At present, it has covered 300+ bank customers, and a total of 2000+ projects have been implemented.

2) The actual controller has 15 years of experience working in top overseas financial databases to ensure the company's strategic development direction in the financial IT and database fields. In particular, in 2018, the company officially acquired 67.15% of the shares of Korea's SUNJE SOFT Co., Ltd. with 73 million yuan in cash, and entered the high-end domestic database market.

There is a market demand for localizing the database at the 10 billion level, and the company's intellectual property and performance advantages are outstanding. 1) The global database software market was US$46.1 billion in 2018 and is expected to reach US$54.9 billion in 2021, with a compound annual growth rate of 9.1%. Meanwhile, China's database software market is growing steadily, and the China Research Industry Research Institute expects the market size to reach 20 billion yuan by 2020. Companies such as Oracle and IBM have occupied major domestic market shares for a long time due to first-mover advantages and extremely high technical barriers. 2) Information innovation trends, driven by policies, domestic databases may open up 10 billion dollars of replacement space. In particular, demand in the financial sector is extremely high. Domestic databases launched by technology giants such as Ali and Huawei have already made their mark in some scenarios, gradually being replaced by many mainstream banks. 3) In 2018, the company acquired 67.15% of the shares of South Korea's SUNJE SOFT company and has complete independent intellectual property rights for Goldilocks, a distributed memory database product developed by SUNJE SOFT. Furthermore, the company's products have experienced many of the world's top customer cases, such as SK Telecom, China Unicom, etc., and their performance is reliable and mature to meet complex business needs. 4) In 2020, the revenue of the company's domestic database in the Chinese market increased significantly compared to the same period last year, with an increase of more than 50%. As an application software developer for more than 2,000 business IT systems for nearly 400 independent corporate banks, the company has mature distributed transactional database business software, and also has a complete line of bank front, middle, and back office products, which have advantages in adapting these application systems when replacing databases. According to the 2020 performance forecast, the company's database has been launched in a provincial bank, and has been tested and accepted by a joint stock bank and many large urban commercial banks, and will be launched one after another. Under the trend of the innovative IT infrastructure industry, the company's database products have outstanding advantages in terms of intellectual property and performance, and are expected to enjoy the localization dividends of the 10-billion-level market.

Maintain a “buy” rating. According to key assumptions, revenue for the year 2020 to 2022 is estimated to be 1,206 million yuan, 1,575 million yuan and 2,046 million yuan respectively, and net profit attributable to the mother in 2020-2022 is expected to be 67 million yuan, 95 million yuan and 146 million yuan respectively. Maintain the “buy” rating by considering the leading position of banks in the IT segment and the trend of the database innovation industry.

Risk warning: The progress of the database business falls short of expectations; the risk of rising personnel remuneration; the risk of differences between forecast assumptions and actual conditions.