Donghua Software (002065)： Eastern China has made a difference
Donghua Software (002065): Eastern China has made a difference
Summary of the report: Donghua Software is currently the largest core IT integrator in China. The company’s revenue / net profit CAGR in 2003-18 was 28% / 23%, respectively.
Since the company went public, it has completed three leapfrog developments. From the initial system integration business, to 杭州桑拿网finance and medical IT software solution business, to cooperating with Huawei and Tencent to promote cloud computing business, innovation every industrial era.The forefront of the company shows the company’s forward-looking strategic vision.
Join hands with Huawei to benefit from accelerated financial innovation.
Donghua Software cooperated with Huawei in 2002 and became a Huawei Five Diamond Certified Service Provider in 15 years. In March 19, Donghua Software became the first founding member of Huawei’s Financial Open Innovation Alliance. In August 19, Donghua Software and Huawei released twoJoint solution for the financial industry based on Kunpeng ecology.
We believe that Huawei is the main promoter of innovation in the financial industry in developing countries. Donghua has cultivated in the financial IT field for many years and cooperated with Huawei in depth. It is expected to reap the benefits of financial IT orders in 2020 and become Huawei’s industrial chain in the financial IT fieldImportant player.
Donghua Software is expected to realize Huawei’s hardware advantages and innovate in many fields.
Huawei’s advantages in hardware manufacturing in developing countries are very prominent. Taking servers as an example, 16Q2-19Q2 Huawei servers account for 13% -20% of internal expansion (IDC data).
In addition to the financial industry, Donghua Software has expanded comprehensive cooperation with Huawei in many fields such as medical care, power, central enterprises, and public utilities.
In our judgment, Donghua Software has further matured with Huawei Kunpeng chips, and it is expected to rely on Huawei for gains in innovation in many fields.
In response to favorable policies, the company’s medical business is expected to accelerate.
The Health and Medical Commission requires that the application level of the electronic medical record system of all three-tier hospitals should reach grade 3 or higher in 2019; in 2020, all three grade hospitals should achieve grade 4 or higher, and the second-tier hospitals need to achieve grade 3 or higher.
In 19 years, DRGs pilot cities were introduced and promoted nationwide.
Donghua Software is expected to rely on the Dongfeng policy of electronic medical record upgrade and DRGs promotion, and rely on the company’s first-mover advantage in the medical IT field (covering more than 600 hospitals) to achieve accelerated medical business growth.
It is estimated that Donghua Software’s net profit will be 19-21.
The financial business was given a value of 14.5 billion target cities in 19 years, the medical business was worth 15.4 billion target cities, and the other businesses were worth 8.1 to 10 billion target cities.
The overall target market value of 38-40 billion, corresponding to a target price of 12.
Risk reminder: policy efforts are worse than expected, accounts receivable / goodwill impairment exceeds expectations