On January 16, 2022, Yuxin Technology (300674) issued an announcement that Panjing Investment Wang Zhen, Nuoding Asset Zeng Xianzhao, Mingtai Asset Liu Chongcai, Mingda Asset Li Tao, Minsen Investment Ding Fanlun, Liuhe Investment You Xiaohui, Huarong Securities Zheng Heyou, United Asset Asset Pang Xinghua Zhao Jingmeng, Hanhe Capital Li Ang, Haifutong Fund Yu Chenyang, Cathay Investment Trust Albert Cheng, Guohua Life An Zichao, Guohai Franklin Zhang Zhiqiang, State Adjustment Fund Jia Qiuran, Genxi Asset Zhu Dengke, Gao Yi Asset Xie Pengyu Lu Yi, Oriental Alpha Fund Chen Weiwen, Bairongyun IRNataly, Anxin Fund Sun Linghao, PAG Deng Enqi, New Silk Road Feng Xin, Zhongtai Securities Research Institute Wen Xuechen Liu Yizhe, Xingquan Fund Huang Linwei Sun Ruowei, BOCOM Schroder Wei Yumin, Wells Fargo Fund Lin Haoxiang Sun Quan, Boshi Fund Wang Zengcai, Sino Analytica Fund Ge Jiannan, Zhongrong Trust Zhao Xiaoyuan, CICC Fund Hou Mingwei, Morgan Huaxin Xue Yipin, Jianxin Wealth Management Wang Jingchen, Jianxin Fund Xu Jie, Yunfeng Asset Liu Ting, Xingyin Wealth Management Xu Juanjuan, Xincheng Life Asset Management Jin Wei, Xincheng Fund Wang Ying, Western Lide Fund Hou Wensheng Wen Zhenyu Liu Hui, Everyone Assets Zhang Meng Li Yuanlong, Yuanwangjiao Investment Zhai Hao, Yuancheng Investment Hu Yanan Su Liuzhu Tang Yadan, Yuyi Investment Zheng Xiaoming, Yimi Fund Sun Huidong, Pacific Insurance Wang Jing, Taiping Fund Wei Zhiyu, Shen wan Lingxin Fund Zhang Jintao, Shanghai Yingshui Investment Lin Xin, PICC Asset Li Zheng, PUB Ansheng Chu Yanhui, Ping An Asset Zhang Liang, Ping An Pension Chen Xushan, Minsheng Bank Plus Bank Fund Xiao Zhiwei, Jiupeng Investment Dou Jinhu, Jiutai Fund Deng Mao, Evolutionary Assets Wang Zhongsheng, Jin Yuanshun An Zhang Bo, Jin Youchuang ZhiShi Xiantao, Golden Eagle Fund Jiang Binyu, Jinguang Asset Yan Wei, Jiangsu Ruihua Zhang Haifeng, Huatai Bairui Lu Congzhen, Huabao Fund Zheng Yingliang, Hongdao Investment Zhuang Zichao, Haitong Self-operated Wei Shugen, Haichen Investment Peng Yaomin, China Life Security Fund Zhang Fan, Guangzhou Financial Holdings Huang Yong, GF Self-operated Yang Xiaolin, Everbright Prudential Fund Lin Xiaofeng, Everbright Prudential Ugly Kailiang, Fuanda Investment An Junjie, Soochow Fund Hu Qicong, Orient Self-operated Zhang Kaiyuan, Dingtian Investment Zhang Huai'an, Bodao Fund Gao Xiaoxiao, Zhongyi Asset Zang Yi, Tianfeng Securities Miao Xinjun Wang Qianwen Chen Yijiao Zhang Ruofan Zhang Yifan Li Puyu Wen Canxi, Penghua Fund Xu Liheng Wang Shiqian Dong Wei Wang Zhifei, Yinhua Fund Sun Haoyang Guo Sijie, Zhongzhu Venture Capital Cheng Cang, CITIC Asset Management Guo Yu, CITIC Construction Investment Self-operated Yang Ruiqi, Zhongrui Heyin Dong Jiannan, Zhongfu Investment Guan Jingxin, Zhengyi Asset Wu Shuxi, Zhenke Fund Zeng Technology, CMB International Gong Yiyi, Yuxiu Capital Feng Jiebo, Yurong Investment Zhao Wei, Yixu Investment Bi Qilin, Industrial Securities Asset Manager Wang Zheng, Industrial Bank Asset Management Jiang Yaokun, Xinghua Fund Gao Weixuan, Xintai Life Liu Yue, Xinhua Asset Zhu Zhanyu, Qingdao Investment Wang Hao, Tongyuan Investment Gu Xi, Tianhong Fund Zhang Lei, Snow Bohong Chuansong, Capital Securities Self-operated Wang Xiansen, Shanghai Dingfeng Zhang Haifeng, Sanxi Capital Zeng Fengwen, Qingdao Pengyuan Qin Jianli, Qianhe Capital Sun Ke, Ping An Fund Zhai Sen investigated our company on January 13, 2022.
The main contents of this survey are:
Q: What is the expected growth rate of financial credit creation business this year? What is the rhythm of the overall landing?
A: The company has long been involved in the polishing process of the demonstration project and related products with Dahang Financial, and in this process, together with the customer, it has accumulated corresponding capabilities in all aspects, including the company's own product level. These projects are not limited to peripheral projects, but have also been carried out on core systems and large core projects. The process of promoting the entire Xinchuang business is also the company's continuous communication and iteration with customers, based on the new hardware system of Xinchuang, using products, including data products, credit products, regulatory products and channel products, etc., to upgrade and replace with the help of clouds, databases and other ways, to achieve the all-round delivery of a large bank. Small and medium-sized banks will be more challenging in this regard, on the one hand, the technology capabilities of small and medium-sized banks themselves, on the other hand, the way fintech providers provide services to customers, in this process fintech providers are both problems and opportunities and challenges.
Q: In the process of xinchuang project, there will be cooperation with the underlying hardware manufacturers, for software manufacturers, the amount of transformation of related code is large?
A: From the project case of one of our large banks, this workload is still very large, exceeding our initial expectations, and the follow-up investment is far more than the project planning. But after the first project, the follow-up project is very smooth, because the accumulation of experience in products and subsequent delivery, the profit margin has gradually been reflected, for the company, through the cooperation opportunities with the big bank and the open platform, as well as our own product accumulation and research and development capabilities, so the company can seize the relevant business opportunities, so the follow-up of the entire profit situation and project implementation will be more optimistic.
Q: What is the proportion of companies in Sino-Creative Cooperation Project? What is the difference between the profit margin of Xinchuang project and traditional projects?
A: In terms of the profit margin of Sinotron project cooperation, it needs to be divided into several types of projects. At present, the relatively large project is still an integration and agency project, and the difference between the previous company's integration projects is small, and the profit margin is relatively stable; the software products of the integration project cooperating with the base partner, such as the database and the cloud management platform, will involve the secondary development of a relatively large workload, or the migration of the application system level, in this process, as the integrator of the project, it is necessary to purchase the database and cloud management platform of Huawei and other partners, and the comprehensive gross profit margin is lower, because the project involves a new system. It is also a learning process, but for companies, most of these projects are continuous. The contract amount of the follow-up project generally remains unchanged or the contract amount is larger, but it is basically the company's contract amount, because the hardware manufacturer's product maintenance fee in the second year is relatively limited, and the comprehensive gross profit margin of the follow-up project company will be higher. To sum up, in the short term, the company will value the business opportunities of Xinchuang and the products and technical capabilities accumulated in this process, and in the long run, these accumulated capabilities and products will enable the company to obtain sustainable business opportunities, and the comprehensive gross profit margin will gradually increase.
Q: In terms of the digital yuan, how does the company participate and how does it affect the company? Is it possible to bring about changes in business models? Will the cooperation with the six major banks give the company a certain advantage?
A: We divide the digital yuan into four links, the first is the issuance link, the central bank is responsible, the second is the digital yuan operation, including the state-owned large banks, including nine institutions, the third is the cooperative operation institutions, commercial banks and non-bank payment institutions, and the fourth is the consumption link. Yuxin Technology is positioned in the role of application software developers, so in the past two or three years, it has participated in the second and third and fourth links, especially in the second and third links. In the second link, we have a deep cooperation with several large banks as digital yuan operating institutions. Including front desk (digital RMB App), middle office (front-end system, user center, service center, management center) and back office (accounting and clearing) all-round cooperation. In the third link, we have cooperated with a number of small and medium-sized banks in the docking operation agency and the scene merchant side, including the payment side (such as personal card binding, redemption, redemption), scene side (personal, public), and payment and clearing. Cooperation with non-operational banks is usually divided into several stages: 0 Complete the docking of digital RMB payment channels to realize the redemption, redemption and basic functions of personal and corporate business; B. Realize the functions of portals such as mobile phones and counter related contracting, query management, etc., to improve the overall experience; C. From the portal, merchants and users can fully experience the convenience and consumption of digital yuan; in the fourth link, we connect with the banking ecological partners on the scene side through the bank side to support the use of digital yuan. In terms of the possibility of business model changes, for financial IT system providers, the current demand for system transformation will be gradually released in the next three to five years. For financial IT manufacturers, the current digital yuan is mainly in the payment consumption scenario; the need for the transformation of the back-end system is not very large. Of course, as the digital yuan gradually enters the circulation link, the demand for multiple application scenarios such as credit, supervision, data, and channels will gradually emerge, and the demand for system transformation and upgrading will increase, and it is not excluded that some new business models will appear.
Q: What are the competitive advantages of companies compared to companies in the same industry?
A: The company has the following advantages: First, the company's product line is comprehensive, and the company currently has four main product lines and other product lines. These four main product lines are formed after years of development and accumulation, and the impact of individual product line order fluctuations can be mitigated through the multi-product line model; the second is that the customer structure is balanced, which is basically not affected by the business changes of a single category of customers; Third, R & D investment continues to increase, in the past many years the company has been adhering to high growth in R & D investment, for the accumulation of technology, product accumulation to provide good support; fourth, management efficiency continues to improve, the company to ensure business growth while attaching importance to improve management efficiency, driving the improvement of human efficiency, and then combined with product advantages and customer resource advantages can lead the development of the industry.
Q: What is the source of confidence that the company's profit growth rate is higher than the revenue growth rate? What is the judgment on the employment situation in the industry in 2022?
A: Combined with the performance of the company in the three years of listing, the profit growth rate has been higher than the revenue growth rate, which is the result of the company's active management and fine management, ensuring quality growth and improvement of human efficiency; it is also based on the company's technical and product capabilities accumulated in the industry for more than 20 years. Annual personnel growth in the industry has been the norm for many years. The company has also been focusing on improving human efficiency and gradually reducing the single dependence on the growth of the number of employees. In addition, the company's efforts in product and research and development will also reduce the impact of labor fluctuations.
Q: How to understand the incremental part of the industry Xinchuang compared to the previous business?
A: At present, Xinchuang is more inclined to transform the original system, such as a Xinchuang project, based on a distributed architecture, the complexity of the technology is much higher than that of the traditional credit business, and the product itself also needs to be reconstructed, so the complexity of the project increases, the technical requirements are also improved, and the contract amount increases accordingly. In the long run, the complexity of Xinchuang projects and the high requirements of technology will make the concentration of the entire industry increase to a certain extent, and business opportunities tend to be concentrated to the head of the manufacturers.
Q: What is the approximate delivery cycle of the credit product line? Approximately in what year is the order revenue recognized?
A: Credit product line, under the distributed architecture superimposed microservice system, the scale and complexity of the project increased, such projects generally take about 18 months from investment to acceptance, so the order in the second half of 2021 is likely to be unable to recognize revenue in the current year. Overall, revenue is a trend of delayed recognition, and the growth of the company's order amount is also far more than the growth of the number of orders, and the growth of the order amount is more obvious.
Q: Historically, companies have formed credit, data, and other product lines through acquisitions, and are there any prospects for acquiring other product lines after that?
A: Yuxin Technology in the past in the process of cooperation with major customers, contact with a lot of systems, so there is still a lot of accumulation at the business level, credit product line is also after the acquisition of Beijing Yichu in 2007, injected with the previous accumulation of capabilities, and on this basis and cooperation with major cooperative banks, but also in the technical architecture has been reconstructed, and in the follow-up more than ten years of development process to prevail, these multi-faceted efforts and practices, so that the company in the past few years in the field of credit products to occupy the first place. For acquisitions and mergers, the company has done more in the past, and it also has fully equipped the ability in this regard, and will consider relevant opportunities in the market in the future to expand products and markets at home or abroad.
Q: The market share of the corporate financial cloud business ranked first consecutively, what services are provided? What are the ideas for the future?
A: According to the "China Financial Cloud Market (H1 2021) Tracking" report released by International Data Corporation (IDC), in the field of financial clouds, corporate financial clouds continue to rank first in the market share of financial cloud (application) solutions in China. Since the beginning of 2019, the company's financial cloud business has ranked first for three consecutive years with its advantages, and its attention in the market is getting higher and higher, relying on the company's accumulation at the cloud level in the past ten years, there are related product services and solutions. Whether it is the construction of data centers, project consulting, solutions, and follow-up operation and maintenance, there are very strong capabilities. Since 2007, the company has also been the first in the industry to provide financial cloud services to small and medium-sized banks, and it is also the largest company to date. In the past two years, with Baidu's strategic investment, the two sides have also carried out in-depth cooperation in financial cloud, jointly promoted the joint marketing of related products, and also seen better results. In the future, companies still hope to be able to use their full range of capabilities to find the right opportunities in the market and develop their business in the best way. For example, the financial cloud business in the innovation of the operation of the business is well reflected, in the process of financial innovation and operation of the business, with the customer joint operation of the business, the system itself is safe, stable, reliable is crucial, in this regard the company has a very strong advantage. At the same time, the company's financial cloud business is also under the supervision of the regulatory authorities, and has accumulated very strong capabilities in the past ten years. In the future, the company will continue to combine the capabilities of all levels of the financial cloud and continue to obtain business returns.
Q: Does the company have any plans to expand overseas? Are there any from local competitors?
A: The company began to go to sea at the end of 2019, although it encountered the epidemic, but after two years of accumulation, it still has good results. Singapore, Indonesia, Malaysia, Cambodia all have related business orders, which will be reflected in revenue later. Based on this, in 2022, there will be greater confidence to obtain rapid growth, one is that its own business volume is not large, the foundation is relatively low, and the other is that the service and product capabilities accumulated in China are more recognized in overseas markets. It has advantages over the products and services of overseas companies. Competitors in different product lines are also very different. Competitors in traditional software systems may be more than IT service companies, including IBM, HP, Accenture and other companies, and they have more advantages than The products and services of Yuxin Technology, which is due to the product capabilities accumulated in China for more than two decades. Overseas business opportunities will not be too worried about competing with foreign companies, of course, may also encounter domestic manufacturers. In the long run, the overseas market still depends on the product strength of each company.
Q: What is the outlook for the company's overall operation in the next few years? What percentage of businesses are expected to achieve in the future?
A: The software business is relatively mature, the development trend is relatively clear, the future hope to continue to maintain high-quality growth, the company is a relatively sustainable growth rate; the industry boom is also relatively high, the company also expects a better growth rate and long-term steady development. The integration business is not the core business of the company, and the expected revenue is relatively stable, especially after Xinchuang enters a stable period, hoping to grow by nearly 10%. The uncertainty of innovative operation business is larger, the company is also actively layout and related planning, the average growth in the past two years is about 50%, the next two to three years are expected to maintain this growth rate; in the next three to five years, it is expected that the comprehensive gross profit margin there is room for improvement, and the net profit margin will also have a certain degree of improvement.
Q: How is the progress of the company's cooperation between Huawei and Tencent in Xinchuang?
A: Huawei and Tencent are important ecological partners of the company, and have in-depth cooperation and comprehensive promotion in domestic and foreign markets. In the domestic market, in addition to the traditional integration business, we have multiple projects in system services, PaaS tool development, integrated solutions and products. Representative cooperation includes replacing the credit card core system of a joint-stock bank with HUAWEI CLOUD, and we undertake integration, adaptation, application migration, cloud management platform development and upgrading, etc., and replacing the data warehouse platform based on Tianrui and subsequent data mart migration and adaptation with Huawei Gauss database. The cooperation with Tencent includes the reconstruction and upgrading of the application system on the Tencent Cloud, as well as the landing of the Tencent database and mobile development platform. These are business-consistent, and the subsequent revenue scale may be larger, and the contribution to the company's revenue and profits is more obvious. The company also has the ability and opportunity to continue to export, precipitate products and services, and help more financial institutions in terms of xinchuang. In overseas markets, our cooperation with Huawei is mainly in the digital banking solutions and business operations, as well as the output of relatively mature products and solutions in the domestic Xinchuang. In addition, our cooperation with Tencent includes the output of channel products on the Tencent cloud architecture, including the operation of the small loan business system, and the digital transformation of the bank as a whole. The cooperation between Yuxin Technology and dock manufacturers is not limited to Huawei and Tencent. The company and Baidu, Toutiao, NetEase, and including many database platform vendors, such as Pingkai Xingchen, Dameng, Nanda GM, ZTE, Renmin University Jincang, etc. have cooperation cases, in the future xinchuang project in the process of rapid advancement, the company and the major database manufacturers also have business opportunities and very good cooperation.
Q: How is the industry boom?
A: Based on the growth of the company's existing orders in hand, because the company's revenue recognition is based on the final inspection method, the revenue recognition is obviously lagging behind the order situation, so the basic representative of the current order in hand can represent the general revenue growth trend in 2022, and the prosperity of the industry is still very high from the data point of view.
The main business of Yuxin Technology: software development and services, system integration sales and services, and other main businesses
Yuxin Technology's 2021 third quarter report shows that the company's main revenue was 2.053 billion yuan, up 26.59% year-on-year; net profit attributable to the mother was 155 million yuan, up 13.77% year-on-year; deducted non-net profit was 127 million yuan, up 4.76% year-on-year; among them, in the third quarter of 2021, the company's single-quarter main revenue was 702 million yuan, up 28.93% year-on-year; single-quarter net profit attributable to the mother was 21.7296 million yuan, up 207.09% year-on-year. In the single quarter, the non-net profit was 20.1435 million yuan, up 19509.73% year-on-year; the debt ratio was 34.41%, the investment income was 45.2318 million yuan, the financial expense was -5.898 million yuan, and the gross profit margin was 35.39%.
A total of 11 institutions have given ratings in the last 90 days, 10 buy ratings and 1 overweight rating; the average target price of institutions in the past 90 days has been 28.8; the Securities Star Valuation Analysis Tool shows that Yuxin Technology (300674) good company rating is 3.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 3.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)
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