Company Profile

Jiangsu Hoperun Software Co., Ltd. engages in the provision of software solutions and services. Its products include power solutions, retail trade solutions, finance solutions, telematics, corporation solutions, apparel supply chain, government solutions, communication and mobile solutions, and geographic information system application.

The company was founded on June 29, 2006 and is headquartered in Nanjing, China.

(Source: MarketWatch)

Event

Jiangsu Hoperun Software (“the company”) released an announcement on February 5, 2023 that its independently developed HiHopeOS software (financial release version) has passed the adaptation verification test for IT application innovation conducted by the Financial IT Application Innovation Ecosystem Laboratory. The software is the first financial digital service terminal operating system that meets the requirements of financial information innovation. This is of great significance to the company to promote the landing of OpenHarmony in the financial sector.

Comments

The company consolidates its cornerstone businesses.

In the first three quarters of 2022, the company achieved a revenue of CNY2.214 billion and a net profit attributable to shareholders of CNY121 million.

Specifically, in the first half of 2022, the company’s revenue from financial technology business was CNY702 million, a year-on-year increase of 18.67%; the revenue from smart IoT business reached CNY545 million, a year-on-year growth of 23.38%; and the revenue from the smart energy business amounted to CNY150 million.

The company focuses on its major business of finance, power and Internet of Things and steadily advances its growth strategy. The company transforms its products to build innovative business based on open source OpenHarmony and OpenEuler.

With in-depth cooperation with Huawei, the company has formulated innovative business strategies for OpenHarmony, OpenEuler, carbon peaking & neutrality smart park, and bank automation testing for the next few years. The company also plans to develop the “2+8+N” financial and power industries.

In terms of the financial industry, the company’s HiHopeOS is the main force of the OpenHarmony commercial version. The company also cooperates with the top ten financial POS terminal manufacturers to meet the needs for the localization of financial terminals.

In terms of the power industry, the company benefits from years of cooperation with power grid enterprises, which brings sufficient technical reserves. The company also benefits from the advantages of OpenHarmony in the deployment of the Internet of Things, which can be well applied to multi-terminal scenarios in the power industry.

The HopeStage, a server operating system based on the OpenEuler (release version), has been compatible with most domestic mainstream hardware manufacturers for scenarios such as finance, electric power, smart parks, and industrial interconnection.

The company has introduced equity incentives and has obtained the first license for digital service terminal operating system granted by UnionPay.

In January 2023, the company planned to transfer 20% of the stake of its wholly-owned subsidiary Runkaihong to Hehu Zhilian, which will be used for employee equity incentives of Runkaihong in the future.

The company has also recruited executives and backbones staff and mobilized employee enthusiasm to ensure its long-term development. In November 2022, HiHopeOS (Financial Release Version) obtained the first license for digital service terminal operating system granted by UnionPay.

Earnings forecast and investment recommendation

We estimate the company’s net profit attributable to shareholders at CNY185 million, CNY399 million and CNY549 million for 2022, 2023 and 2024, respectively, implying a PE ratio of 99.9x, 46.3x and 33.7x respectively, based on the closing price on February 3.

We give the company an initial rating of “Outperform”.

Potential risks

Slower-than-expected progress of R&D and innovation; rising labor costs; the attrition of key employees.