Can Jinyi Technology, which has risen on the wave of ETC, continue to achieve strong performance?

Recently, Jinyi Technology released its 2019 semi-annual report.

The announcement shows that the ETC industry has benefited from the policy of abolishing provincial border toll stations and has become highly prosperous. In the first half of 2019, the industry entered a period of explosive growth, and the demand for ETC-related equipment increased significantly. Jinyi Technology's performance achieved substantial growth, with operating income of 333 million yuan, up 46.23% from the same period last year, and a net profit attributable to shareholders of listed companies of 45.0331 million yuan.

Looking back: 2012 to 2018

5 years of golden development period + 2 years of stagnation period can be a simple summary of Jinyi Technology’s development in the first 7 years.

2012 to 2015 was the golden period for the development of China’s intelligent transportation industry, and also the period when Jinyi Technology’s performance soared.

Financial report data shows that Jinyi Technology's operating income from 2012 to 2015 was RMB 268 million, RMB 355 million, RMB 427 million and RMB 752 million respectively, with a revenue growth rate of 64.36%; net profit was RMB 44.978 million, RMB 48.3772 million, RMB 57.7925 million and RMB 140 million respectively, with a net profit growth rate of 211.26%.

From 2012 to 2015, Jinyi Technology's operating income and net profit showed a substantial growth trend year by year, with stable profitability and good business development. The reason why Jinyi Technology has achieved such a good result in just three years is not only the driving force of the times, but also the efforts and struggles of Jinyi Technology.

After nearly five years of golden development, Jinyi Technology declined for some reasons after its listing in 2017, and its performance has been "falling" all the way.

According to the financial report, the operating income in 2017 was 623 million yuan, a year-on-year decrease of 6.88%, and the net profit was 87.7937 million yuan, a year-on-year decrease of 26.84%; the operating income in 2018 was 604 million yuan, a year-on-year decrease of 3.05%, and the net profit was 16.6099 million yuan, a year-on-year decrease of 81.08%. A series of data is enough to prove that Jinyi Technology's performance has been sluggish since its listing, and the overall business status of the company has declined.

There are two main reasons for the stagnation of Jinyi Technology's development in the past two years:

First, market growth has slowed down.

With the basic completion of the national ETC networking project in the first half of 2016, the stimulating effect of policy factors on the development of the intelligent transportation industry has gradually weakened and returned to the normal growth state of the industry, restricting the further development and expansion of Jinyi Technology's market scale.

Second, the market competition is fierce.

Annual report data shows that from 2012 to 2018, Jinyi Technology's gross profit margin was 51.23%, 49.87%, 54.15%, 49.30%, 46.58%, 43.27% and 38.39% respectively. From this set of data, it can be found that from 2012 to 2015, Jinyi Technology's average gross profit margin index was around 50.23%, but in 2017 and 2018 it fell to 38.39%.

In addition, although Jinyi Technology is the leader in ETC in the intelligent transportation industry, two other companies that cannot be underestimated in the ETC field are Juli Technology and Wanjie Technology. In the field of path recognition based on radio frequency technology, it is surrounded by ZTE, Aerospace Information and Shanghai Huahong, which are even more powerful. Jinyi Technology's development is under siege, resulting in its revenue in 2017 and 2018 declining month-on-month and year-on-year.

As one of the earliest entrants into the ETC industry, Jinyi Technology did not develop in a smooth direction after its listing. Its declining performance discouraged many investors and partners.

In 2019, Jinyi Technology ushered in the "spring"

In the first half of 2019, stimulated by policies, the market demand for ETC equipment showed explosive growth.

The market demand for ETC equipment has brought huge market opportunities to Jinyi Technology, but the pressure of production and supply has also brought huge challenges to Jinyi Technology's corporate management.

For example, products are in short supply and demand is everywhere. The Planning and Logistics Control Department has to adjust the production plan every day according to the actual situation, and the production line runs 24 hours a day without stopping. The HRs in charge of recruitment in the manufacturing center are either recruiting or on the way to recruit. They go to talent markets, industrial parks, recruitment websites, labor companies, internal recommendations... As long as they can recruit people, HRs will spare no effort to search. The General Affairs Department said that they have not stopped for a moment since mid-April this year, etc.

(The physical examination is moved directly to the park, and the physical examination is carried out directly after the interview is passed, which is convenient for applicants and also improves the efficiency of onboarding)

According to the 2019 semi-annual report released by Jinyi Technology recently, Jinyi Technology's performance has achieved substantial growth, with operating income of 333 million yuan, up 46.23% from the same period last year, and net profit attributable to shareholders of listed companies of 45.0331 million yuan.

After tasting the sweetness from the ETC payment industry, Jinyi Technology has made no secret of its "infatuation" with this capital feast.

In July this year, Jinyi Technology participated in the mixed-ownership reform of state-owned enterprises and increased its capital in Shandong Expressway Xinlian Payment Co., Ltd. (hereinafter referred to as "Xinlian Payment"). After the capital increase, the company will hold 9% of Xinlian Payment's equity. Jinyi will actively promote in-depth cooperation with Xinlian Payment in multiple fields to further expand the application scenarios of ETC and the company's business areas.

In the same month, Jinyi Technology also won the bid for the 270 million yuan ETC gantry system project in Jiangsu Province, accounting for 45.86% of the company's audited operating income in 2018.

In August, Jinyi Technology signed a three-year cooperation agreement with Tencent to explore the market combining smart transportation and digital consumption.

With the rapid development of the intelligent transportation industry, Jinyi Technology has begun to actively expand and develop new businesses in order to seek further sustainable development. For example, the company's products have been extended from ETC to smart highways, vehicle-road collaboration, urban smart parking, urban traffic management, etc.; and the application scenarios of urban transportation and Internet of Vehicles have been continuously expanded.

In the field of highways, Jinyi Technology has obvious advantages. At present, it has a high market share in this market segment and has been at the forefront of this industry segment.

In the field of smart parking, Weilong Jinyi, a subsidiary of Jinyi Technology Holdings, has independently developed ETC parking products and is capable of providing one-stop services for the research, production, supply and marketing of ETC parking products.

Since cars use urban roads and parking lots more frequently than highways, the industry is generally optimistic that the application scenarios of ETC payment will be extended to urban parking lots, on-street parking, gas stations, car beauty and other automobile consumption scenarios.

In 2020, ETC is expected to enter urban scenarios faster, which will bring greater market space for Jinyi Technology.

In the field of smart highways and vehicle-road collaboration, Jinyi Technology has successfully applied to become the "Ministry of Transport's Intelligent Vehicle-Road Collaboration Key Technology and Equipment Industry R&D Center", becoming the only "national team" in the field of vehicle-road collaboration of the Ministry of Transport.

ETC pre-installation, ETC parking, and V2X are the "three pillars" of Jinyi Technology's future market growth. Considering the policy progress, ETC pre-installation is expected to be implemented in 2020, and ETC parking and V2X are expected to be implemented in 2020-2022.

summary

The ETC information industry is highly prosperous, benefiting from the policy of abolishing provincial border toll stations. The industry has entered a period of explosive growth, and the market space for ETC post-services will gradually open up.

Regarding the future market structure, industry insiders pointed out that the ETC industry has a high degree of concentration, with Jinyi Technology, Wanjie Technology, and Juli Technology (which Huaming Intelligent plans to acquire) accounting for nearly 80% of the market share.

Due to the entry barriers in the ETC industry: high qualification requirements and strong customer stickiness, future vehicle standards will often be dominated by leaders, and the future market structure will be that the strong will always be strong.