\u3000\u30003 Midea Group Co.Ltd(000333) 00033)
Event overview
On February 28, 2022, the company released its annual report for 2021, with an annual operating revenue of 3.51 billion yuan, a year-on-year increase of 23.43%; The net profit attributable to the parent company was 1.91 billion yuan, a year-on-year increase of 10.86%. Among them, the operating revenue in the fourth quarter was 1.32 billion yuan, a year-on-year increase of 12.33%; In the fourth quarter, the net profit attributable to the parent company was 920 million yuan, a year-on-year decrease of 3.29%.
Analysis and judgment:
The company’s businesses continued to improve, and the performance of fund consignment and other businesses decreased in the short term due to the strategic adjustment.
In 2021, the company’s performance grew steadily, and the revenue of telecom value-added services increased by 25.95% year-on-year (1.62 billion yuan); Advertising Internet business revenue increased by 53.64% year-on-year (1.284 billion yuan); Software sales increased by 22.58% year-on-year (300 million yuan); The income from fund consignment business and other businesses decreased by 35.3% (310 million yuan) year-on-year.
Throughout the year, the company’s telecom value-added business, software sales business and advertising Internet business continued to maintain steady growth. According to the data released by the company, the company currently has 19.16 million weekly active users, covering more than 90% of institutional customers. The Ifind system vigorously promoted by the company has achieved preliminary results. Based on the strong user scale, the company is expected to continue to lead the rapid development of the above businesses.
The performance of fund consignment business and other businesses met expectations. The company’s annual report pointed out that the decline in revenue of this business was mainly due to the company’s strategic adjustment and the decrease in commission fees of other businesses. The income from fund consignment business increased by 72.94% year-on-year, maintaining a high growth rate. It is expected that with the end of the company’s strategic adjustment, the company’s business is expected to usher in high-speed growth again. According to the fund consignment data of China Securities Investment Fund Industry Association in 2021, Hithink Royalflush Information Network Co.Ltd(300033) as of the fourth quarter of 2021, the holding scale of fund sales was 39.6 billion yuan (non monetary fund), a year-on-year increase of 36.55%.
We believe that Hithink Royalflush Information Network Co.Ltd(300033) still firmly grasp the advantages of user traffic and fund consignment channels, and continue to be optimistic about the rapid growth of the company’s future performance.
The change of advance collection & cash flow remains stable. At present, the stock price has fully reflected the market pessimism and is optimistic about the future valuation repair
From the perspective of business logic, the characteristics of the company’s telecom value-added service are that users first buy value-added services in cash, form advance receipts with the purchase of annual fees, and then recognize them as income month by month, and finally convert them into profits. In addition, there are also consignment and advertising businesses with the attribute of advance collection. Overall, the transmission path of the company’s business model is: “operating cash flow → advance receipts → operating revenue → net profit”. It can be seen that the embodiment of operating revenue and net profit is relatively lagging, and advance receipts and operating cash flow are better forward-looking indicators.
1. In terms of advance receipts, the company’s contract liabilities at the end of 2021 were 1.04 billion yuan, an increase of 10.11% over the end of 2020 (948 million yuan). The amount of contract liabilities reached the highest value in history, laying the foundation for subsequent revenue recognition and profit release.
2. In terms of cash flow, at the end of 2021, the cash flow received by the company from selling goods was 2.13 billion yuan, with a year-on-year increase of 2.99%, and the cash flow remained stable.
Due to the weak market trading situation in the second half of 2021, the focus in the future is to continue to track the advance payment and cash flow indicators. We believe that the current stock price has fully reflected the market pessimism and are optimistic about the valuation reversal trend driven by the verification of fundamental logic.
Investment advice
According to the company’s annual report, we lowered the forecast of the company’s revenue of 5.24/6.79 billion yuan in 22-23 years to 4.63/6.2/7.83 billion yuan in 22-24 years, and EPS from 6.2/8.3 yuan in 22-23 years to 4.7/6.2/8.1 yuan in 22-24 years. Corresponding to the share price of 107.95 yuan on February 28, 2022, PE is 23 / 17 / 13 times respectively. Considering the fundamental expectation difference and oversold valuation, maintain the “buy” rating.
Risk tips
Industry competition intensifies; The implementation of financial science and technology innovation policies was less than expected.
