Yonyou Network Technology Co.Ltd(600588) (600588)
Core view
Event: on December 8, the national development and Reform Commission, the central network information office and other four departments jointly issued the implementation plan for implementing the goal of carbon peak and carbon neutralization and promoting the green and high-quality development of new infrastructure such as data center and 5g, which pointed out that traditional industries should be promoted to speed up the pace of “cloud using digital intelligence”.
Seize the opportunity of accelerating enterprise digital transformation. On December 8, the national development and Reform Commission and other four departments pointed out that we should give full play to the important supporting role of data center and 5g in promoting the digital transformation of traditional industries, promote traditional industries such as coal, iron and steel, cement, nonferrous metals, petrochemical and chemical industry to accelerate the pace of “using data to endow wisdom on the cloud”, optimize the management process and realize cost saving and consumption reduction. On November 30, the Ministry of industry and information technology issued the development plan for the deep integration of informatization and industrialization in the 14th five year plan, which defined the development goal of the deep integration of informatization and industrialization in the 14th five year plan: by 2025, informatization and industrialization will achieve integrated development in a wider range, deeper degree and higher level, and the new generation of information technology will accelerate its penetration into all fields of manufacturing industry, The pace of digital transformation of manufacturing industry has been significantly accelerated, the national integration development index of industrialization and industrialization has reached 105, and the digital popularization rate of enterprise operation and management has reached 80%. On the same day, the Ministry of industry and information technology issued the 14th five year plan for the development of software and information technology service industry and the 14th five year plan for the development of big data industry, which proposed that by 2025, the software business revenue of Enterprises above Designated Size will exceed 14 trillion yuan, with an average annual growth of more than 12%, 1 million industrial apps and the estimated scale of big data industry will exceed 3 trillion yuan, The average annual compound growth rate remained at about 25%. Central enterprises play a strategic supporting role in promoting the integration of industrialization and industrialization and digital transformation. On November 27, the state owned assets supervision and Administration Commission of the State Council and the Ministry of industry and information technology signed the strategic cooperation agreement on accelerating the integration of two modernizations and digital transformation of central enterprises. The digital reform of state-owned enterprises is expected to accelerate again. Facing the large-scale enterprise customer market, the company expanded its leading edge and signed contracts with a number of central enterprises, state-owned enterprises and industry-leading benchmark customers such as national development and investment group, Aerospace Hi-Tech Holding Group Co.Ltd(000901) group, China Post and China Pingmei Shenma Group. In the first three quarters of 2021, the business revenue of large enterprises was 315238 million yuan, a year-on-year increase of 30.1%, accounting for 67.6% of the overall cloud service and software business revenue. The company has a leading edge in the large enterprise market. The acceleration of enterprise digital transformation is expected to further improve the company’s cloud indicators, accelerate the process of business cloud transformation and enhance the company’s competitiveness.
Cloud service orders continued to grow, and arr data continued to reach new highs. The company firmly promoted the cloud transformation strategy, successively stripped off the financial business of changjietong payment and Shenzhen Qianhai UFIDA Lihe Financial Services Co., Ltd., further focused on the main business of cloud services and software, and continuously optimized the revenue structure. In the first three quarters of 2021, The company’s cloud service and software business revenue increased by 23.9% year-on-year to RMB 4.664 billion (considering that the company has begun to outsource the implementation business, the growth rate is higher after the recovery of relevant revenue), of which the cloud service business revenue increased by 83%, which has become the company’s main source of revenue. The company’s annual recurring revenue of cloud service business (ARR) realized RMB 1179.86 million, a month on month increase of 41.5%, of which large customers accounted for the highest proportion; the company’s cloud service contract liabilities were RMB 1304.3 million, an increase of 20.3% over the end of last year and a year-on-year increase of 38.5%, of which subscription related contract liabilities were RMB 702.43 million, an increase of 48.5% over the end of last year and a year-on-year increase of 72.4%.
Sales and R & D investment continued to increase. The company accelerated the transformation of cloud service business and strategically increased investment in R & D, marketing and sales. The overall gross profit margin of the company in the first three quarters was 57.5%. With the implementation of business divestiture, it is expected that the proportion of product and platform revenue in the future revenue structure will continue to increase, which will drive the continuous improvement of the company’s gross profit margin. The sales expenses and R & D expenses increased by 40.55% and 19.52% respectively year-on-year. The rates of sales, management and R & D expenses were + 6.07pct, – 0.10pct and + 2.48pct respectively year-on-year, With the company strengthening the core competence of cloud service products and increasing the market coverage of yonsuite and other products, it is expected that the sales and R & D investment will continue to increase.
Investment suggestion: with the continuous promotion of the company’s cloud transformation strategy, it is expected that the proportion of subscription revenue will continue to increase in the future. It is estimated that the operating revenue of the company from 2021 to 2023 will be RMB 9.975 billion, RMB 12.708 billion and RMB 15.769 billion respectively, the net profit attributable to the parent company will be RMB 1.041 billion, RMB 1.268 billion and RMB 1.685 billion respectively, and the EPS will be RMB 0.32, 0.39 and 0.52 respectively. Maintain the “buy” rating.
Risk tip: the implementation of Enterprise Cloud policy is not as expected; Intensified market competition; The epidemic affects the economic downside risk.
