航天信息(600271.CN)

Aisino:Tax control system leader to benefit from VAT reform;initiate CL-Buy

时间:15-09-25 00:00    来源:高盛高华证券

Source of opportunity

We initiate on Aisino with CL-Buy as we expect its near-monopoly positionin tax control IT systems will allow it to capture the revenue opportunity ofVAT reform, which broadens the requirement to install electronic taxsoftware to many millions of small businesses across many service sectors.Although we forecast this business to make up 21% to 2015E revenues, weexpect it to contribute 46% to overall gross profit. We forecast Aisino’s othermain businesses, channel sales and network software, to grow steadily inline with the overall software/IT market at 10-15% CAGR in 2016-2020E. Weexpect Aisino revenue/net income to grow at 15%/20% CAGR in these years.

Catalyst

(1) The government is due to roll out VAT in property, finance and insuranceindustries, which it estimates will add 10mn new VAT payers in 2015-2016E.On the back of this, We expect Aisino to gain 1.2mn/1.8mn/2.4mn additionaltax control clients in 2015E/2016E/2017E.

(2) We expect its nascent credit rating service to ramp up in 2016. Althoughthe credit rating service will not contribute significant revenue in the shortterm, we think a successful larger scale test of this business innovation willhelp catalyze the stock. We expect segment revenue of Rmb302mn in 2016.

Valuation

Our 12-month target price is Rmb78.60, representing 55% potential upside.It is based on 21X 2020E EPS of Rmb5.10, discounted back to 2016 at an 8%cost of equity, and implies 33x 2016E P/E. We think Aisino’s current valuationlooks inexpensive at 21X 2016E P/E. We believe the market is undervaluingthe long-term benefits from tax reform and its near-monopoly marketposition to generate synergies from a large client base.

Key risks

Slower-than-expected VAT/Business Tax reform execution nationally;smaller-than-expected market share due to strong-than-expectedcompetition; lower-than-expected gross margins due to competition.