Investment events
On July 18, 2024, the State Assets Administration Commission and the Development and Reform Commission jointly issued the “Guiding Opinions on Regulating the Procurement Management of Central Enterprises”. The main contents of the opinions are as follows:
1. Reasonable procurement method selection: inquiry procurement, competitive procurement, negotiation procurement, direct procurement 2. Strengthen procurement source+supplier management: review, screen, and manage various suppliers through digital and intelligent means, and carry out extensive source search and price comparison.
3. Improve the procurement execution and review mechanism: improve the procurement execution mechanism+improve the expert review mechanism 4. Promote openness and transparency in procurement activities: Procurement projects above the limit should use a public method to publicize procurement information on the enterprise's electronic procurement trading platform or media at the provincial level or above.
5. Raise the level of digital intelligence:
a) Deepen the application of electronic procurement systems: On the premise of ensuring uniform rules and standards and connectivity of facilities, enterprises can build their own electronic procurement transaction systems. The relevant systems should be interconnected with the national electronic bidding and bidding public service system and the central enterprise procurement transaction online supervision system, and integrated into a unified public resources trading platform system.
Enterprises that have not yet built their own trading platforms can independently choose other central enterprises, local or third-party electronic trading systems that provide reasonable fees and high-quality services.
b) Vigorously promote enterprise e-commerce stores: Encourage central enterprises to build their own e-commerce stores and purchase standard industrial products, low-value consumables, and general service projects through enterprise e-commerce stores.
Incident reviews
We believe that:
1. This “Guiding Opinion” is the first time that the State Assets Administration Commission and the Development and Reform Commission have standardized guidance on the construction of procurement systems and procurement process management for central state-owned enterprises. The content provides an effective foundation for central state-owned enterprises to build their own procurement systems or select third-party procurement and operation platforms. It plays a very important guiding role in the procurement management of central enterprises and state-owned enterprises. Currently, the number of central enterprises has reached 97, and the number of state-owned enterprises has reached 0.217 million. Retrofits/upgrades on the IT side will bring huge market space.
2. For capable central state-owned enterprises, their recruitment systems may prefer to build their own and simultaneously connect to public resource trading platforms for management. Other central state-owned enterprises may choose a third-party public platform for recruitment to ensure that the recruitment process is fair and notarized, and that they have enough suppliers to choose from.
3. Newpoint Software has focused on smart recruitment business for many years
The government built a public resource trading platform. By the end of 2023, the company had built a total of public resource trading platform projects covering 29 provinces (autonomous regions and municipalities directly under the Central Government), serving more than 200 prefectures and cities, and more than 1,000 counties and cities.
On the enterprise side, the digital transformation of central enterprises and state-owned enterprises is used as a starting point to support the digital reform of the enterprise supply chain. By the end of 2023, the company had accepted more than 60 electronic bidding and procurement platforms for large state-owned enterprises and state-owned enterprises.
The “Xindian Electronic Trading Platform”, a SaaS platform created by a self-built third-party platform-side company, actively promotes the marketization of trading platforms, continues to promote the marketization of trading platforms in many provinces, cities, and counties, and provides market-based trading platforms for bidders with a project scale below the limit. At the same time, it provides products such as “Biaqiao” and “Biaozheng Connect” and combines AI to develop large-scale models for the procurement industry to enable tender document preparation, intelligent automatic pricing, etc., to provide a reliable and effective procurement platform for both parties.
Profit forecasting and valuation
We forecast that the company will achieve revenue of 2.24/2.56/2.99 billion yuan in 2024-2026, with year-on-year growth rates of -8.13%/14.28%/16.49%, respectively, and corresponding net profit of 0.235/0.284/0.341 billion yuan, with year-on-year growth rates of 20.74%/20.61%/20.40%, corresponding EPS of 0.71/0.86/1.03 yuan, corresponding PE 29.15/24.16/20.07 times.
Risk warning
Competition for smart recruitment intensified, and policy progress fell short of expectations.