The Zhitong Finance app learned that Guohai Securities released a research report saying that data is a key resource for the future. China has large data volume and strong demand for data products, and has the key conditions required for data transactions. The state has successively clarified regulatory standards and supervisory units through the publication of the “Twenty Rules on Data” and the establishment of the National Bureau of Data. The bank believes that in the process of implementing subsequent policies, data exchanges, data infrastructure, and data element operators will successively benefit. The industry's first “recommended” rating.

Guohai Securities's views are as follows:

Data elements: The data element market consists of data collection, storage, processing, analysis, trading, and security. China's data volume is large, and in line with government-led trading mechanisms, it is expected to gain a first-mover advantage in the field of global data trading. Although the demand for data transactions is obvious, OTC transactions are still the main ones due to lack of regulation and infrastructure.

What: Data generated by the government, enterprises, and individuals, after being resourced, commercialized, and capitalized, becomes a data asset with transaction value, participates in production and operation, and forms the price and system of factors of production.

Why: The demand for data transactions in China is strong, and the data supply has an advantage. 1) Supply side: According to IDC statistics, in 2022, China's data volume accounted for 25% of the world. It has scarce resources, and data element development already has a first-mover advantage; 2) Demand side: demand for data transactions continues to increase. Take the financial industry as an example. According to statistics from the Shanghai Data Exchange, the number of data procurement projects in 2019-2021 has a CAGR of 40%, and the annual transaction volume is at the level of 10 billion; 3) It is expected that the land transaction model will increase fiscal revenue: land development, post-capitalization transactions, all bring direct sales revenue and incremental tax revenue to finance.

Where are the difficulties: 1) The domestic and foreign data trading markets are dominated by OTC transactions: due to regulations that are difficult to identify, intervene, and verify, China's OTC transaction amount in 2022 accounted for more than 95% of the total transaction amount; overseas in 2020-2021, Agartha's OTC market alone reached 91.6 million US dollars in revenue for 35 weeks; 2) Digital infrastructure is not yet perfect: According to IDC statistics, China's data volume accounted for about 19%-25% of the global data volume. However, in 2019, the data security market accounted for only 3%, and data security construction needed to be improved; 3) Regulation Gaps: In the early stages of industry development, it is not clear who will manage it and how.

A critical inflection point: Under the country's high priority, the current situation, which cannot be relied upon and is not supervised, can be changed. 1) Regulatory basis: The “Twenty Rules of Data” was released in December 2022, clarifying the separation of powers between data holding, use, and management to resolve the issue of data transaction authorization; 2) Supervisory authority: The National Bureau of Data was officially established in October 2023, and the supervisory entity was clarified.

Market size and composition: In 2021, the total size of China's data factor market was 81.5 billion. The bank expects data transactions to maintain a CAGR of more than 50% in 2023-2025, driving the growth rate of data analysis and ecological security links by about 30%, and the overall market size will exceed 200 billion in 2025. In 2026-2030, data transactions and analysis are the core links, and it is expected that there will still be 40%-45% YoY.

Data trading: In 2022, only 20% of data will be released for trading as data products, 5% of data products will choose on-market transactions as data targets, and 35% of data targets will be listed normally. In the long run, there is still room for tens of times the scale of data transactions. Under effective catalysts such as the government's active release of public data, continuous improvement of market trading mechanisms, and continuous optimization of compliance methods, etc., the scale and proportion of in-market transactions have grown rapidly, and the trading mechanism model dominated by the Chinese government has been verified. The bank believes that the transaction scale space will continue to be freed up, and there is still a possibility that the amount of on-market transactions will grow rapidly in 2024 and 2025.

Ecological protection: The rapid growth in the scale of data transactions will drive demand for transaction mechanisms and digital infrastructure. In addition to exchanges providing a trading ecosystem, the importance of data security is self-evident. However, compared to the world at present, there is an imbalance between the size of China's data security market and the volume of data, and data security awareness needs to be raised. According to estimates that China's data volume and data security market share 19%-25% and 3% of the global data security market, respectively, there is still 6-9 times more room for the data security market compared to 2019. If we consider the new security requirements in the data transaction scenario, there may be more than ten times more room in the data security market.

Data element operation: Data asset transactions are the most valuable part of the data element market. As public data gradually opens up, the data analysis market expects the 2026-2030 CAGR to reach 45%.

Other data services: Although data collection and data storage are in high demand, there is limited room for growth due to the impact of products already covering the vast majority of enterprises and high operation and maintenance costs; data processing technology content is low, and will be gradually replaced as upstream and downstream enterprises extend their capabilities. For example, data analysis companies themselves have data processing capabilities and do not require third-party data processing services.

Investment advice: Among industrial chain enterprises, benefiting from the rapid increase in the scale of on-market transactions, favorable enterprises such as exchanges, ecological infrastructure, and data analysis will be released at an accelerated pace.

Data exchanges: State-owned shares, government guidance, and exchange construction are fundamental to on-market data trading. Currently, due to the uneven capabilities of data service providers, the exchange still provides several merchant services, and the benefits are obvious at the stage where the scale of transactions is expanding and value-added services are not completely divested. Companies with state-owned backgrounds and shares in major exchanges include Zhejiang Digital Culture (600633.SH), Anheng Information (688023.SH), and Radio and Television Communications (002152.SZ).

Revenue model: Current exchange revenue = commission+membership fee+value-added service fee. Referring to the Shanghai Digital Exchange, the commission rate is 2.5%, the membership fee is about 10,000 yuan, and the value-added service fee range is large, ranging from 20,000 to 200,000.

Segregation of discussions: The “Twenty Rules of Data” clearly states that the agreed and separated on-market data trading system, that is, value-added services such as processing and analysis, will no longer be provided by data exchanges, but will be provided by data service providers. After the trading mechanism was improved and the exchange divested value-added services, the value of service providers became prominent.

Data service providers: Currently, the business content is scattered, and only some high-quality enterprises have achieved initial integration; in the long run, it will gradually be integrated into a complex all-powerful digital provider, and the value will be fully released after the agreed separation is completed.

Data collection and processing: Due to its reliance on manpower, the traditional model has limited room for growth.

Segments that need to be met: China has a large data volume, accounting for about 25% of the world in 2022, but the data security market is small, accounting for only 3% of the world, far less than the share of data volume. Market potential such as data security and storage has not been fully unleashed. 1) In terms of data security, along with the development of cloud computing and data transactions, security measures, plans, and security awareness have all changed. Relevant companies that focus on research and development and actively deploy new technologies include Geel Software and Anheng Information; 2) In terms of data storage, the storage ratio (storage/production volume) is less than 9%, and large amounts of data have not been stored. Despite strong demand, traditional data centers have high operating and maintenance costs and high revenue fluctuations, and transformation is inevitable. Companies that are actively transforming and have new technology capabilities include Yi Hualu (300212.SZ) and Starring Technology (688031.SH).

Data element operators: Data analysis related to the government, finance, and medical industries accounts for 44% of the total market size. The bank expects service providers with a high market share, a large amount of high-quality data, emphasis on R&D, and data analysis capabilities to accelerate growth after the trading mechanism is improved. Related companies include Guoxin New Health (000503.SZ), Zhongke Jiangnan (301153.SZ), Jiuyuan Yinhai (002777.SZ), Shenzhen Sanda A (000032.SZ), etc.

Risk warning: policy implementation falls short of expectations; market transaction growth falls short of expectations; risk of falling short of expectations in setting data authorization standards; risk of data factor market development falling short of expectations; failure to develop data compliance; risk of falling short of expected risk of data transaction mechanism construction; risk of mismatch between data infrastructure and data transactions; risk of mismatch between data infrastructure and data transactions; risk of discrepancies between estimates and reality.