AsiaInfo Technology, founded in 1993, is the leading enterprise of China Telecom Corporation Software products and related Services (BOSS). It has a market share of more than 50% in domestic BSS business, which is significantly ahead of other enterprises.
The company has strong software research and development strength, currently actively open up the enterprise cloud market, mainly involved in areas including DSaaS, enterprise multi-cloud management platform (cloud MSP), vertical industry and so on.
The exogenous driving forces for the development of AsiaInfo technology include: 1. The revenue trend of China's domestic operators is improving, reversing the negative growth trend in 2014-19, and it is estimated that CAGR 2.0% in 2020-25 (data source: GSMA); 2. Operators vigorously expand the application scenarios of 5G in vertical industries and industries, the network support system OSS is in strong demand, and the absolute and relative investment keeps growing. 3. The domestic cloud computing industry is developing rapidly. The scale is expected to exceed 370 billion yuan in 2023, with a compound growth rate of more than 28% in 2020-23. Cloud computing has accelerated penetration in finance, government affairs, energy and other industries. 4. At present, the proportion of hybrid cloud IT architecture in China is relatively low, and there is much room for improvement in the long run. China's cloud MSP market is expected to exceed 15.6 billion yuan in 2023, with a compound growth rate of more than CAGR50% in 2020-2023. 5. With the explosive growth of data flow, DSaaS industry is developing at a high speed.
The endogenous driving forces for the development of AsiaInfo technology include: 1. The company has received strategic investment from China Mobile Limited (as of 2020Q2, holding nearly 20%). Most of the executives have the experience of China Mobile Limited's management. at present, they have established strategic cooperative relations with major operators and are the absolute leader in the operator software market. 2. The company has strong software research and development strength. Dr. CTO Ouyang has won the top honorary title of American operator Telecom Academician, with more than 4300 R & D team and more than 35 honorary qualifications, and has strong competitiveness in BOSS and enterprise cloud market. 3. The company can obtain valuable operator desensitized authorization data for DSaaS industry data analysis. 4. The company has established cooperation with major cloud manufacturers at home and abroad, has the advantage of cloud network resources, and won the cloud MSP excellent certification to help enterprises get on the cloud quickly; 5. The company already has successful service experience in finance, government affairs, transportation and other fields, and is expected to further increase its penetration in the vertical industry.
Revenue expectations:
Affected by the epidemic, the examination and approval and delivery of BSS business are slow in 2020. The company's BOSS business will resume growth in 2021, while non-telecom business will still maintain explosive growth. Affected by the recovery of old business and the rapid growth of new business, the net profit in 20-22 is expected to be 6.62 shock 7.27 / 818 million yuan, a year-on-year increase of 62%, 9.8%, 12.5%, and EPS of 0.72, 0.79, 0.89 yuan respectively. The current share price values PE at 14.16, 12.90, 11.45 times.
Company valuation:
Combining the absolute valuation and the relative valuation method, the reasonable share price range of the company is expected to be 15.34-16.85 Hong Kong dollars, which is still 25% 37% higher than at present. The company participates in the rule-making of 5G network, has the strength of core technology research and development, and will have a bright future in the industrial Internet era. The company has created general enterprise cloud console products and subscription-based DSaaS products, which are expected to achieve rapid expansion in non-telecom business, covering for the first time and giving a "buy" rating. (as of March 26th, 2021, the exchange rate of RMB to Hong Kong dollar: converted according to 1BOSS 1.1983) 1. Adopt PE valuation method for AsiaInfo Technology BOSS and vertical enterprise cloud services, considering that the company is an absolute leader in BOSS business, and the core competitive advantage is obvious. The vertical enterprise cloud business creates a general PaaS product model for the industry, and the products are expected to be expanded and replicated rapidly, and the products will maintain high growth in the next few years, and there is a lot of room for improvement. The company will be given a PE of 15.5-16.5 times, corresponding to a value of HK $11.84-12.61 per share according to 21-year expectations.
2. Adopt PS valuation method for DSaaS business, considering that AsiaInfo Technology DSaaS business adopts subscription charging model, through helping enterprise operation and management optimization, obtain sustainable income, the gross profit margin of single project product is higher, 20-22 years CAGR 40%, using PS valuation method, reference Hong Kong stock, A-share SaaS model company's PS valuation of 6.6-12.9 times, give the company 5.5-6.5x PS According to the 21-year forecast, the corresponding value per share is HK $3.80-4.49.
Risk tips: 1, operator capital expenditure is not as expected, 5G network construction is not as expected; 2, the company's vertical industry and enterprise cloud development is not as expected; 3, operator data authorization policy changes.