NEWLAND(000997) 申万宏源·2024-11-14 01:06Investment Rating and Valuation - The report initiates coverage with a "Buy" rating for Newland (000997) [4][7] - The target market capitalization is estimated at CNY 30.9 billion, based on a 28x PE multiple for 2024 [7] - Expected revenue for 2024-2026 is CNY 8.456 billion, CNY 9.628 billion, and CNY 10.806 billion, respectively, with net profits of CNY 1.103 billion, CNY 1.375 billion, and CNY 1.692 billion [7] Core Business and Growth Drivers - Newland's main businesses include merchant operation and value-added services (46% of H1 2024 revenue), electronic payment and information recognition products (42%), and industry application and software development services (12%) [4] - The company's merchant operation and value-added services are expected to grow due to increased pricing power and overseas expansion [4] - The electronic payment and information recognition products segment is driven by strong overseas sales and localization strategies [6] Merchant Operation and Value-Added Services - The merchant operation segment has seen a structural optimization, with merchants generating over CNY 500,000 in monthly turnover increasing by more than 16% in 2023 [5] - The payment method structure has also improved, with QR code payments accounting for a higher proportion of transactions, which have higher net rates compared to card payments [5] - The company has strengthened cooperation with banks and large KA clients, further improving the turnover structure [44] Overseas Expansion and Hardware Growth - Newland's POS terminal shipments ranked first globally in 2022, with a strong presence in Latin America, Southeast Asia, and Europe [6] - The company has implemented localized and physical marketing strategies, achieving significant growth in Brazil and expanding into Mexico and Argentina [6] - The overseas market, particularly in Latin America, Southeast Asia, and Europe, is expected to grow at a CAGR of 16%, 15.73%, and 12.8%, respectively, over the next five years [54] Technological Advancements - Newland has developed advanced technologies in payment, recognition, blockchain, and AI, with products such as the global first QR code decoding chip and AI edge computing products [61] - The company has expanded its AIDC (Automatic Identification and Data Collection) capabilities, integrating AI to create intelligent solutions for various industries [64] - Newland's AI platform, AutoML, supports applications in barcode reading, OCR, and visual inspection, with products like the NLS-FM600 intelligent vision camera entering mass production [64] Financial Projections - Merchant operation and value-added services are expected to grow at a rate of 2%, 17%, and 13% from 2024 to 2026, with gross margins of 46%, 46%, and 47% [68][69] - Electronic payment and information recognition products are projected to grow at 6%, 11%, and 13% from 2024 to 2026, with gross margins of 39%, 41%, and 42% [70] Industry Trends and Competitive Landscape - The payment industry has seen a turning point in 2023, with stricter regulations leading to a reduction in price wars and an increase in fee rates [4] - The number of payment institutions with national licenses has decreased from 61 in 2022 to 50 in 2024, benefiting leading companies like Newland [31] - Newland's subsidiary, Guotong Xingyi, ranks third in the 2023 China Payment Institution TOP Comprehensive Index, highlighting its strong competitive position [26]