Hundsun Technologies Inc. (600570) Delivers Steady Growth in Performance and Demonstrates Confidence in Long-Term Development with Equity Incentive Scheme

HUNDSUN TECHNOLOGIES INC. (600570): STEADY GROWTH IN PERFORMANCE EQUITY INCENTIVE SCHEME SHOWS CONFIDENCE

Company Profile: Hundsun Technologies Inc. specializes in developing and marketing technological solutions for the financial services sector. The group offers integrated solutions in areas such as securities trading, wealth management, brokerage, asset management, management of financial operations in the institutional sector, investment management, private equity management, handling of public offerings, financing, corporate financial management, business operation, and supply chain management, primarily intended for financial institutions, banks, fund managers, trust companies, insurance companies, securities brokers, and investment funds. The turnover is divided across the following revenue sources:

• Sales of software (98.5%)
• Sales of material solutions (1.2%)
• Sales of technology parks (0.3%)

95.9% of the net sales are conducted in China (Source: MarketScreener).

Event: Hundsun Technologies Inc. announced its semi-annual financial results for 2023.

Investment Highlights:

The company's performance grew steadily, with revenue in Q2 accelerating from a year earlier. In 1H23, the growth of its revenue and net income was higher than its earnings forecasts. Its gross margin was 71.93%, down 0.53 percentage points, showing that the company has maintained high competitiveness. Its selling/administrative/R&D expense rate was 14.69%/14.16%/41.42%, down 0.15pps/0.19pps/2.22pps from a year ago. Thanks to its good control over expense rates, the company continued the scissors gap of profit. Its net income attributable to shareholders in Q2 stood at CNY 224 million, versus a loss of CNY 55 million in the same period of last year; its net income deducting non-recurring items came in at CNY 190 million, a surge of 102.63% from a year ago, a significant recovery. The fair value changes in the first half of 2023 contributed CNY 124 million, compared with a loss of CNY 244 million in the same period of last year.

Its equity incentive scheme covers core staff, showing its confidence in long-term development. The company announced its equity incentive scheme (draft), covering 1,613 directors and senior executives, and it plans to grant 15.39 million shares to its employees, accounting for 0.81% of its outstanding shares. The exercise price was at CNY 39.44 per share, and its net income growth is required no less than 10% from a year earlier from 2023 to 2025. The scheme is conducive to binding the interest of employees and showing its confidence in development.

Earnings Forecast and Investment Recommendation:

According to its latest financial report, we revised our earnings forecasts and estimated its net income attributable to shareholders at CNY 1.806 billion in 2023, CNY 2.207 billion in 2024, and CNY 2.673 billion in 2025. Maintain "Outperform".

Potential Risks:

Slower-than-expected policy implementation; slower-than-expected new product promotion.

Andun为您带来最新券商看点，供您参考：

HUNDSUN TECHNOLOGIES INC. (600570): Performance Growth and Equity Incentive Scheme Demonstrate Confidence in Long-Term Development