Goldman Sachs: Hundsun (600570.SS) — Asia Financials Corporate Day Takeaways
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Goldman Sachs highlighted key takeaways from its Asia Financials Corporate Day discussions with Hundsun's (600570.SS) management. Although first-quarter revenue showed mixed performance due to timing and strategic adjustments, a significant jump in contract liabilities indicates a healthy order backlog. However, full-year revenue recognition remains heavily dependent on fourth-quarter delivery.
The domestic technology innovation upgrade cycle is generating robust demand, with 2026–2027 projected to be peak implementation years. However, stricter customer acceptance standards for critical systems are extending revenue recognition cycles beyond the previous 270-day average. While asset management technology and enterprise data services grew, segments like wealth technology and risk and platform technology saw notable declines. Separately, clients increasingly seek a balance between in-house development and third-party outsourcing, sustaining steady demand for specialized vendors during core system upgrades.
Future growth drivers include the Hong Kong subsidiary, which serves over 250 brokerages and benefits from new cross-border investment regulations and virtual asset trading licenses. Additionally, AI-driven data demand is boosting enterprise data services. Hundsun aims to lift gross margins—currently around 70%—by pushing subscription revenue past 50% of the total. The company has committed to maintaining a 30% total shareholder return (dividends plus buybacks) and is pivoting its R&D focus toward AI-native products. Goldman Sachs rates the stock a Buy with a 12-month target price of RMB 34.77, based on a blended EV/Sales and DCF valuation, offering 53.9% upside from the current share price of RMB 22.59.