Event: Taiji shares released its annual report, with an operating income of 8.533 billion yuan, an increase of 20.81% over the same period last year, and a net profit of 369 million yuan belonging to shareholders of listed companies, an increase of 9.94% over the same period last year.
Main points of investment
Network security and autonomous controllable business have become the biggest bright spot of the year: benefiting from the rapid growth of Xinchuang market, the company promotes the development of independent software products, industry solutions and service-oriented business through major projects. In 2020, Taiji shares signed a total contract amount of 17.188 billion yuan, an increase of 50.37% over the same period last year. Among them, the revenue of network security and self-controllable business reached 3.122 billion yuan, an increase of 71.11% over the same period last year, accounting for 36.58% of the total income, becoming the biggest bright spot of the year. In the whole year, the contract value of Xinchuang business was nearly 7 billion yuan, becoming a benchmark enterprise in Xinchuang industry.
The effect of corporate governance is remarkable, and the operating net cash flow has improved significantly: Taiji shares had a net cash flow of 1.084 billion yuan in 2020, an increase of 483.63% over the same period last year, a substantial improvement over the previous year; and management expenses of 850 million yuan, down-1.43% from the same period last year. On the one hand, the return of Xinchuang business is better, on the other hand, the company attaches great importance to cash management, strengthens the control of working capital, and achieves obvious results in collection and cost reduction. In addition, the company's scientific and technological research and development capability continues to improve, and the company's R & D investment in 2020 was 598 million yuan, an increase of 40.91% over the same period last year, accounting for 7.01% of the operating income. The continuous emergence of innovative achievements has laid a solid foundation for the company's comprehensive transformation to digital business.
The market share of people's Congress Jincang Xinchuang market is the first in the country: the company disclosed that in 2020, the market share of people's Congress Jincang database products in the party and government credit market is more than half, and it has become a benchmark enterprise in the industry. At the start-up of the industry, Taiji shares actively promote the layout of finance, energy, telecommunications and other fields. Among them, the Kingbase series products of National people's Congress have successively realized the deployment and application of customer core business systems in the smart grid dispatching control system of Chengde Power supply Company of State Grid, ODS system of Rural Credit Cooperatives of Xinjiang Autonomous region, Oil and Gas Control Center-SCADA Control system of State Oil and Gas Pipe Network Company, and centralized settlement system between China Mobile networks. The system runs stably and reliably. It proves the technical leadership, safety and reliability of the database products of the National people's Congress.
The resource support of China Electric Company and China Electric Power Taiji is worth looking forward to: China Electric Power has positioned Taiji shares as the core industrial platform of the group's Internet communication industry and a key driving force for digital transformation. this is the first development orientation for Taiji shares since Minister Chen Zhaoxiong became chairman of China Electric Power, and it is of great significance. In the future, China Electric Company and CLP Taiji are expected to give full support to Taiji shares and continue to inject new business resources into the company's development. Especially recently, East China computer, which is also owned by China Electric Power Co., Ltd., has been injected with high-quality assets for mixed reform, which has opened the curtain of accelerating the reform of China Electric Power and even the entire central and state-owned enterprises.
Profit forecast and investment rating: due to the fierce market competition, we adjust the company's EPS to 0.71 (- 0.23) / 0.79 (- 0.44) yuan in 2021-2022, and the EPS is expected to be 0.87 yuan in 2023; the current market capitalization corresponds to 2021-2023 PE31/28/25 times. Considering the rapid progress of the company's product transformation, this year continues to usher in Xinchuang volume opportunities to maintain the "buy" rating.
Risk hint: the promotion of Xinchuang business is not up to expectations; the market share in each segment is not as expected.