Hang Seng Electronics (600570): Interim results are in line with expectations and benefit from capital market development and technological transformation in the long run
Event: The company announced the 2019 interim report and achieved operating income of 15.
24 ppm, an increase of 11 years.
97%, achieving a net profit attributable to shareholders of listed companies of 6.
780,000 yuan, an increase of 125 in ten years.
85%, realizing non-recurring 南宁桑拿net profit attributable to shareholders of listed companies2.
56 ppm, an increase of 14 in ten years.
Meet market expectations.
The implementation of new regulations and the recovery of the capital market, and rising customer demand led to steady growth in the income side.
1) H1 operating income in 201915.
24 ppm, an increase of 11 years.
97%, considering the higher base of Q2 last year, the growth rate is expected to increase in the second half of the year.
Mainly benefited from the revival of the capital market and the science and technology board plan, the implementation of new regulatory policies for asset management, the opening of the Shanghai-London Stock Connect, and other favorable regulatory policies, which have stimulated the demand for financial institution customers for company products.
Among them, income from wealth management business increased by 27.
08%, income from asset management business increased 9.
05%, contributing to the first half of revenue growth.
Although the brokerage business income increased by zero.
99%, but gross margin increased by 14.
2) The wealth management business mainly benefited from the successful bidding of TA project of large-scale bank wealth management subsidiary after the implementation of the new capital management regulations, completed the head customer card slot, and conducted intelligent investment consultation, fund consignment sales, and wealth management5.
0 Breakthroughs in core system trading centers / clearing centers.
3) The asset management business mainly benefited from the recovery of the securities market and the implementation of the science and technology board business policy.
It is expected that the influence of the science and technology board business and some business income will be reflected in Q3.
4) The non-recurring profit and loss for the period is 4.
22 ppm, mainly due to changes in fair value gains and losses and investment income obtained from disposal of transactional financial assets.
The overall increase in expenses was steady, research and development continued to be vigorously expanded, and cloud architecture products were significantly improved.
1) The company’s overall expenses increased by about 16 in ten years.
42%, mainly due to the company’s increased investment in research and development, and personnel supplementation growth.
Among them, the selling expenses are 5.
00 ppm, an increase of 16 in ten years.
75%; administrative costs are 1.
7.8 billion, an annual increase of 6.
19%; R & D expenses are 6.
73 ppm, an increase of 19 years.
2) R & D expenses in this period accounted for 44 of operating income.
19%, investing heavily in research and development to ensure the company’s product technology upgrades quickly.
In this issue, the company has comprehensively promoted the upgrading of its online technology architecture, and formed a large-, medium- and large-scale strategy in which technology is central, data is central, and business is central.
In May 2019, the company joined Ant Financial and Alibaba Cloud to jointly release the new generation of distributed service development platform JRES3.
0 Powered by ant, the newly developed product is based on JRES3.
The proportion of 0 architectures has increased significantly.
The advance receipts and cash flow conditions actually matched the operating conditions.
1) The advance payment at the end of the period is 9.
390,000 yuan, a decrease of 27 from the beginning of the year.
32%, but basically the same as last year.
Taking into account the company’s business model and payment situation is actually normal.
2) The cash received for sales of goods and labor services in this period is 12.
28 trillion, compared with 11 in the same period last year.
27 ppm, matching revenue growth.
3) The net cash flow from operating activities in the period is -4.
19 trillion, considering the increase in the initial payment of staff budget, is expected to significantly improve in the second half of the year.
The business of core innovative subsidiaries has developed rapidly, and third parties have connected or opened up incremental space.
1) Although the important and innovative subsidiary Whalteng Network was in the strategic occupation period, the current period revenue was 2,978.
480,000 yuan, a substantial increase of about 100%, and enough to narrow.
There are more than 2,000 GTN platform registration agencies, which are growing rapidly, and OPENAPI service connection agencies continue to increase.
In addition, the rapid market research and development was successful, and Xiaoying Intelligent KYC was awarded many contracts.
2) The overall private equity solutions established by the subsidiary Yunji and SEC such as Oplus and i Private Equity are committed to opening up the private cloud product market space after the third-party intervention policy is implemented.
Maintain “Buy” rating.
Adjust the profit forecast based on key assumptions and interim reports. It is estimated that the operating income for 2019-2021 will be 39.
2.1 billion, 46.
4.8 billion and 54.
5.2 billion (39 before adjustment).
2.6 billion, 46.
60 billion and 54.
1.4 billion), net profit attributable to mothers was 11.
3.1 billion, 12.
10 billion and 14.
9.2 billion (11 before adjustment).
35 billion, 12.
1.8 billion and 14.
Maintain a “Buy” rating with reference to comparable companies.
Risk reminders: The degree of benefit from the new policy is less than expected; the progress of financial cloud deployment is less than expected; the degree of prosperity of the capital market is less than expected; the risk that key assumptions do not match the actual situation