The company's main business includes bank card electronic zone payment terminal products (pos machine). According to estimates, China's POS machine market still has 5-6 times market space. From 2012 onwards, the market will continue to grow at a high speed, with a growth rate exceeding 40% being a high probability event. At the same time, the company is expected to become the industry leader with its three advantages of technology, qualification and price.
With the three major advantages escorting, the company's market share is likely to continue to increase. First, unlike the market that the POS machine technology content is low, we believe that the company's technical strength is relatively strong. The company's technical advantages are very conducive to customized design and product upgrades, helping to attract potential new customers in various industries; second, the company has the qualification certification advantage. For example, in the case of UnionPay, which accounts for 40% of domestic purchases, the company is one of the only 2-3 companies that have been shortlisted for the bidding of UnionPay. Under the premise of having the ability to enter the four major banks, the company's qualification certification will become an important weight for entering the four major banks. Third, the company has outstanding price advantage. In 2010, the average price of the company's POS machines was 877 yuan/set. The average selling price of other companies in the industry is often higher than 1,000 yuan. The company has a price advantage but does not detract from its own earnings. The gross profit margin has remained stable against its rivals for many years.
It is estimated that the company's net profit compound growth rate will be 45% in the next three years. The EPS in 2011, 2012 and 2013 will be 0.66 yuan, 1.03 yuan and 1.53 yuan respectively, corresponding to 33 times, 21 times and 14 times respectively. Give the company a target price of 30.90 yuan for 6 months, corresponding to 30 times PE in 2012. The target price implies a 40.9% upside potential, and the initial rating gives a “buy†rating.
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