On 2022-01-19, Geng Junjun of Guoyuan Securities Co., Ltd. studied Hande Information and issued a research report "Annual performance Forecast for 2021: substantial increase in net profit and expectations for High growth of Independent products". This report gives a buy rating to Hande Information, which believes that its target price is 11.09 yuan, while the current stock price is 9.4 yuan, with an expected increase of 17.98 percent.

Hande Information (300170)
Events:
The company issued the 2021 Annual results Forecast after the close on January 18, 2022.
Comments:
It is estimated that the net profit of returning to the mother is 190-245 million yuan, and the non-recurrent profit and loss is about 376 million yuan.
In 2021, the company is expected to achieve a net profit of 1.90-245 million yuan, an increase of 189.15% and 272.85% over the same period last year. The main reason is that the associated enterprises have developed rapidly and are highly recognized by the capital market, so the valuation has increased rapidly in recent years. In 2021, the disposal and sale of some subsidiary shares obtained a better return on investment. The company expects to deduct the non-return net profit and loss of RMB 1.86-131 million, and the non-recurrent profit and loss is about RMB 376 million. The main reason is that the company has lost significant influence on the former associated enterprise and reclassified it as investment income arising from the accounting of financial assets; and received financial support funds from the registered area. The main reasons for the larger decrease in net profit after deducting non-recurring profits and losses are: 1) although the valuation of the associated enterprise is relatively high, the overall investment period is still in the current stage, and the increase in the loss of the associated enterprise calculated according to the shareholding ratio of the company in 2021 increases, which has a certain impact on the net profit; 2) the company's convertible bonds were listed in December 2020, resulting in a certain amount of interest expenditure for the whole year of 2021. 3) the company has overseas business and assets, and the relative appreciation of RMB in 2021 will bring certain exchange losses.
Issue a new incentive plan, which will give a strong incentive to the general manager.
On December 8, the company issued the second Phase 2021 Stock option incentive Plan (draft), which intends to grant 49.5 million stock options, accounting for 5.6% of the total share capital, with an exercise price of 7.77 yuan per share. Among them, it is proposed to grant 17.28 million stock options to Mr. Huang Yiquan, director and general manager of the company, which will help Mr. Huang Yiquan lead the company to a longer-term goal. The annual performance evaluation target of stock options is: based on the net profit in 2022, the growth rate of net profit in 2020-2024 is not less than 80,100 and 120%, respectively, which will help to mobilize the enthusiasm of employees and enhance the competitiveness of the company.
The company's independent products are gradually mature, and C2M and GMC are expected to usher in rapid development.
The company starts with high-end ERP consulting services, continues to expand business boundaries, evolves to digital ecological integrated service providers, and independent products gradually mature. Thanks to the strengthening demand of the company's downstream customers and increasing digital investment, the company's independent product production and marketing C2M business and group management and control GMC business, which the company has focused on research and development in recent years, are expected to achieve high growth in 2021. ERP has become an important entrance to To B business, the company has more than 6000 high-end customers, the traditional pan-ERP business and ITO business will grow steadily in 2021, laying a stable foundation for the overall business development. In the first half of 2021, the company's revenue from software sales and implementation business accounted for 35.24%, a growth rate of 33.45%.
Investment advice and profit Forecast
The company has gathered efforts to build the integration of China and Taiwan, and the proportion of revenue from independent products has gradually increased, which has opened up a new road of growth. It is predicted that the operating income of the company from 2021 to 2023 will be 27.90,32.67 and 3.819 billion yuan. With reference to the "2021 Annual performance Forecast", the net profit of the company will be adjusted to 2.14,1.23 and 143 million yuan, corresponding to PE of 36.72,63.79,54.93 times. The company will continue to increase investment in its own products and solutions, which will have a certain impact on net profit margin, so it is more appropriate to use PS valuation method. The company's PS has mainly run between 2-6 times in the past three years, maintaining its target PS of 3 times in 2022, corresponding to a target price of 11.09 yuan per share and maintaining a "buy" rating.
Risk hint
COVID-19 's repeated epidemic situation; the risk of insufficient demand caused by the macroeconomic downturn; the risk of rising labor costs and brain drain; the intensification of competition in the IT consulting service industry; and the lower-than-expected promotion of the integration of China and Taiwan business.

The stock has been rated by one agency and one buy rating in the last 90 days; the average institutional target price has been 11.0 in the past 90 days; according to the Securities Star valuation analysis tool, Hande Information (300170) has a good company rating of 2.5 stars, a good price rating of 2 stars and a comprehensive valuation rating of 2 stars. (rating range: 1-5 stars, up to 5 stars)