Deep ploughing data security, with card as shield terminal as spear. The company started with smart card business, including financial IC cards, ETC cards, etc., and then gradually expanded to POS terminals, products including traditional POS terminals, wireless POS terminals, QR code POS terminals and so on. The smart card industry has experienced rapid development in the past decade, and the total scale is close to saturation. Benefiting from the technological maturity and cost advantages of domestic chip cards, the market share of domestic chip cards has rapidly increased from 21% in 2016 to 47% in 2019. We judge that the main driver of smart card performance growth in the future comes from the accelerated penetration of domestic chip cards. The POS terminal industry is expected to remain in the boom range, with growth expected to exceed 20 per cent. The company is a leading enterprise in the POS terminal industry, with a market share of 15% in the Asia-Pacific region. The company has a full reserve of POS terminal technology and is actively exploring payment scenarios based on biometric technology such as face recognition. With the boost of demand for new POS terminals, it is expected that the company's terminal business will return to rapid growth.
With the change of the actual controller, the degree of marketization of the company is expected to be greatly improved. On March 21, 2021, the company announced that the Industrial Group, Huagong Venture Capital and metaphorical Investment signed a "share transfer Agreement", stipulating that the synonymous investment should be transferred to a total of 105699178 shares held by the Industrial Group and Huagong Venture Capital at a price of 10.37 yuan per share, accounting for 24.58% of the company's total share capital. After this transaction, the shares held by Tongyu Investment accounted for 24.58% of the total share capital. The industrial group and Huagong Venture Capital will own 2.99% and 2.00% of the company's total share capital respectively. After the completion of the share transfer transaction, the actual controller of the company will be changed from Huazhong University of Science and Technology to Aidi and Yan Chunyu. The reform of schools and enterprises has entered the deep water area, and the introduction of social capital is expected to greatly stimulate the vitality of the main body of enterprises. Referring to the successful experience of the reform of state-owned enterprises in the past, we believe that the introduction of social capital will effectively stimulate the vitality of enterprises and promote enterprises to reduce costs, improve quality and increase efficiency.
After the change of the controller, we expect that the new board of directors may reduce the company's management expenses by streamlining the organizational structure and re-coordinating staff compensation expenses, so as to improve the overall operational efficiency.
Investment suggestion: we estimate that the company's income from 2020 to 2022 will be 1.705 billion yuan, 2.028 billion yuan and 2.431 billion yuan respectively, and the net profit will be-61 million yuan, 34 million yuan and 122 million yuan respectively. Benefit from the improvement of business efficiency brought about by the change of the actual controller, covering for the first time, giving "buy-A"
Investment rating.
Risk hint: the effect of organizational structure adjustment is not as expected, the promotion of the new intelligent POS terminal is not as expected, and the promotion process of educational informatization is not as expected.