Hang Seng Electronics (600570) 2019 Annual Report Results Pre-increasing Announcement Comments

Hang Seng Electronics (600570) 2019 Annual Report Results Pre-increasing Announcement Comments

The company’s 2019 performance exceeded expectations.

The company is a leader in financial IT and Fintech, and its market share in fund core systems far exceeds the rankings.

The company’s productization rate is high, it has long insisted on innovation investment, and has played a leading role in the development and application of new technologies.

We judge that the company will benefit from the development of the financial market and the opening up to the outside world for a long time, and maintain the “Buy” rating.

The company announced the 2019 annual results pre-announcement announcement: It is estimated that the net profit attributable to shareholders of listed companies in 2019 will be about 12.
.

900 million to 13.

400 million, a growth of 100% to 108% in ten years.

The estimated net profit attributable to shareholders of the listed company is about 7.
.

7 to 8.

10,000 yuan, an increase of about 50% to 58% in ten years.

Q4 achieved net profit attributable to mothers in a single quarter4.

87-5.

USD 3.9 billion, a year-on-year increase of 71% to 89%; net profit after deducting non-attribution4.

57-4.

98 million, a year-on-year increase of 61% to 76%.

The initial deduction of non-net profit exceeded expectations, and the single-quarter performance was high, contributing to the science 重庆耍耍网 and technology board.

We think that the over-expectation mainly comes from the large-scale promotion of the IT system construction of science and technology board in 2019, and the amount of revenue was confirmed in Q4.

The science and technology board was officially launched in June 2019. The first batch of companies went public in July and the second batch of companies went public in August.

It only took 8 months from being proposed in November 2018 to the first batch of companies going public.

The urgency of time is more advantageous for the company’s pricing.

The final account received in Q3 was 11 trillion, an increase of 1 from the previous quarter.

600 million yuan, an increase of 3% each year.

We think it is due to the high single-year and single-year revenue recognition of the science and technology board project in the third quarter.

In addition, new requirements for asset management, system direct connection, and brokerage custody are all strong in 2019.

The company continues to control expenses and personnel growth, but the controllable margin is limited.

In addition, the high growth of non-net profit came from the one-time accrued asset impairment in 2018Q4.

The company has been conducting personnel recruitment control since the end of 2017. In 2017, the personnel was slightly inclined, and in 2018 it increased by more than 300 people.

In the first half of this year, due to the urgency of launching the science and technology board, the company’s personnel continued to grow.

In terms of cost, there may be room for continued control.

In addition, the company’s asset impairment losses in 20181.

300 million US dollars, of which Rongdu Technology, Pioneer Technology and Yuanguang Optoelectronics have a total of about 100 million US dollars in asset impairment. Although it is a one-time impact, the reason for asset impairment is not “force majeure” and cannot be included in non-recurringprofit and loss.

In 2019Q4, this effect is expected to be eliminated.

Demand for IT construction continues to increase in 2020, and performance continues to grow.

In terms of customer base development, the main construction needs in 2020 include the system construction needs of bank wealth management subsidiaries under the new asset management regulations, and the IT needs of foreign securities firms and asset management companies in the context of financial opening to the outside world.

In terms of the expansion of existing customer needs, including the New Third Board Reform, MOM, and stock quotes.

At the same time, the company has increased cooperation with Ant Financial, and has new products and business content in financial cloud, blockchain and China-Taiwan construction.
Risk factors: Financial regulation restricts the development of innovative businesses, and market activity declines.

Investment suggestion: According to the performance forecast and the latest accounting standards, raise the EPS forecast for 2019-2021 to 1.
52/1.

71/2.

22 yuan (previous forecast was 1.

18/1.

31/1.

64 yuan), corresponding to PE57 / 51 / 39X.

Maintain “Buy” rating.