报告名称：Hundsun Technologies Inc(600570)Fine and confiscation in 2015-16；long term growt
报告类型：点评报告
报告日期：2016-01-27
研究机构：高盛高华
股票名称：恒生电子
股票代码：600570
页数：6
简介：What's changed
On September 7, 2015, Hundsun announced that its 60% owned subsidiaryHundsun Networks was found guilty by CSRC and was subject to Rmb399mnfine and Rmb133mn revenue confiscation due to its illegal margin financingthrough HOMS system. Although the penalty payment timing is not finalizedyet, Hundsun has recognized part of the penalty as administration expense inits 3Q15 report. Administration expense increased to Rmb372mn in 3Q15 vs.
Rmb188mn in 3Q14. We estimate Hundsun may have recognized aroundRmb130mn of the total penalty in 3Q15 based on the incrementaladministration expense in 3Q15 vs. 3Q14 and 2Q15. This suggests that theentire penalty could be recognized over four quarters.
The A-share market has been weak from an index and trading volumeperspective since its high in June 2015. Daily trading volume has come downfrom Rmb1-2tn in June 2015 to Rmb500bn currently, which we believe willimpact Hundsun’s 2.0 business which is highly related to transaction volume.
Implications
We previously modeled in 60% of the total penalty as the payment detailswere not finalized then. We now expect Hundsun to allocate the announcedtotal penalty over four quarters based on our estimate of the recognition in3Q15. We turn more cautious on its long term growth as a weaker stockmarket will likely lead to slower IT investment growth.
Valuation
We cut our earnings estimates by 32%/17% for 2015E/16E respectively tofactor in the penalty and also cut our 2017E-2020E net income CAGR to 28%from 32% to factor in slower IT investment growth. On the revisions, our 12-mdiscounted long-term P/E based TP falls 8% to Rmb44.3 from Rmb47.9 (basedon an unchanged global peers’ median 2016E P/E of 25X on 2020E EPS ofRmb2.55 (was Rmb2.76) discounted to 2016E). Maintain Neutral.
Key risks
A-share market recovery/weakness, policy loosening/tightening.

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