On November 15th, we will have an exchange with Tianxiang Gu, Yingdatai and Property Insurance Co., Ltd. and the company's financial controller and director Dong Zhaohui. Core view The company's main business is currently in a period of high growth opportunities in the industry. Revenue continued to maintain high growth, and net profit increased steadily due to a downward trend in the gross margin of the competitive environment. The industry's entry threshold is high, and the company's future growth space mainly depends on the expansion of commercial banking business. Research main points The industry faces an opportunity period and the market space is huge. The market space of the pos machine has just opened, and the overall growth rate of the industry in the future will increase by more than 40% per year. Market POS machines are divided into traditional POS machines and telephone POS. Among them, traditional POS has high security performance and high gross profit margin, which is about 50%. Customers mainly purchase for UnionPay business, commercial banks, third-party payment, etc. This part has about 6 million units on the market, but conservative estimates. The market should be at least 20 million units, and the optimism can reach 40 million units. The cost of telephone POS is low and the security performance is poor. In strict sense, it cannot meet the requirements of financial POS. It cannot swipe credit cards, mainly used for kaka between merchants. Transfer, telephone POS has a low gross profit, about 20% of the way, this piece has about 10 million units on the market. Since UnionPay has a large voice in terms of market capacity, it will select high-quality customer resources to deploy POS machines, so many first-tier cities are not yet fully popular (not all consumer sites); second- and third-tier cities Popularization may be even worse, only some big shopping malls will have it. In addition, the POS machine has been widely popular since 2008, and the POS machine is replaced in 5 years. Next year, the first wave of update demand will be ushered in. The new demand and update requirements will ensure sufficient market space. The company will continue to maintain high growth in revenue and a steady increase in net profit. From the current announcement of the company, the operating income has basically maintained above 50% growth, and the net profit growth can be maintained at around 15%. The industry generally has an uncertain factor in the fourth quarter, as banks may have surprise purchases in the last few months, and this has happened in 11 years, so this year's performance still has a variable in the fourth quarter. We believe that the company's performance this year and next year should still be the same as this year. In the case of large-scale development of the industry, the operating income will still maintain a growth rate of more than 50%, but it is strongly under pressure from UnionPay business ( Manufacturers are required to cut prices more, the price of products has dropped from 800+ to 700+, and the most recent one in September, some POS machines have dropped to 600+), there may be less net profit growth. In the future, the company's gross profit margin will still face some pressure. The company's recent gross profit margin decline is more serious, we also have a detailed understanding of the reasons for the decline. The decline in gross profit is mainly caused by three factors: 1. The company's current customers are mainly UnionPay business, the company has tried to reduce the proportion of this customer, accounting for 50%-40%-30%, but it is still the company's main Customers, UnionPay business is relatively strong in the procurement field, it will force price reduction every year, the most recent price adjustment in September this year, the original price of more than 800 POS machines have now been reduced to more than 600. Although the company's main raw material chips, MODEM, CPU, printers and other electronic components have also cut prices, but the price cuts have no large price cuts. 2. In order to improve the customer structure, the company recently entered the commercial bank supply chain, and the expenses of sales, R&D and management personnel increased significantly, which also led to the growth of profit growth not as good as revenue growth. 3. After the company's products are sold, there will be some maintenance and upgrade services. Currently, this part of the service industry is provided free of charge. This also causes a part of the cost of the follow-up personnel. This is also the reason why the company costs relatively high during the company. The industry has a high barrier to entry and the company has core competitiveness. The company's core competitiveness is mainly reflected in three aspects. First, the technical threshold is relatively high: there are several manufacturers in China that can be done at present. The technical difference should be small. At present, the R&D background personnel is about 400 people. The second is the certification threshold. Because POS machines are mainly used in the financial industry, they are right. The safety performance requirements are high. The certification threshold mainly includes the certification time and certification fee. The certification fee for a POS machine is about 2 million to 3 million yuan, and the certification time takes 1-2 years. This causes the entry threshold of small small manufacturers to be high; The third is the positional advantage. The downstream customers require that the quantity of products to reach a certain amount will allow you to enter the tender range. For example, UnionPay Business requires that the market for the company's products should reach 80,000 units before allowing the company to enter its bidding system. This will result in a strong and strong situation, and SMEs will easily be marginalized. We believe that the company's future growth space mainly depends on the expansion of commercial banking business. The company's previous business was mainly based on UnionPay business, and now it is making efforts to enter the commercial banking field, and this year has made a major breakthrough, and successfully won the order of 30,000 units of the Bank of China. This year, the company's customer base has achieved a good conversion, and the UnionPay business, commercial banks, and third-party payment institutions are basically balanced. UnionPay business is an industry promoter, so he is relatively strong. Compared with commercial banks, the purchase price is lower than that of commercial banks (the price difference is about 10%). In addition, he has some qualifications for downstream merchants and will have limited choices. Qualified customers come to the distribution point, the supply quantity has a quota limit every year; commercial banks do not have these problems at present. It is understood that the annual demand of the Bank of China is about 200,000 units. The company has entered the BOC supply chain, and the three large-scale industries, agriculture, and construction. Banks have not yet made progress, and China Merchants Bank, Bank of Communications, China Everbright, and Post Office are all in small quantities. The current purchase volume of third-party payment institutions has remained stable. The focus of the company's future business breakthroughs is in the field of commercial banking. If the customer expansion is successful next year, the company's revenue and profits will increase significantly. Earnings forecast and valuation. We believe that the company is in a period of rapid development, and the core supplier status can fully share the return on revenue from high growth in the industry. The company's commercial banking business has made a major breakthrough this year, and the acquisition of Ruibaitai's shares will help the company continue to expand the commercial banking market. Based on the total share capital of 114 million, we conservatively give the company a 2012 earnings forecast of 0.67 yuan per share and 2013 earnings per share of 0.79 yuan. We believe that the company will continue to maintain high growth in the future, and comprehensively consider the company's rating as "overweight". Risk warning: The macroeconomic environment continues to have downside risks, new customers are not expanding smoothly, and other uncertain risks. Large Stewpot,Large Stock Pot,Best Stock Pot,Large Soup Pot SUZHOU JIAYI KITCHENWARE TECHNOLOGY CO.,LTD , https://www.jiayikitchenware.com