\u3000\u30003 Midea Group Co.Ltd(000333) 00033)
Event: the company released its annual report for 2021, realizing an operating revenue of 3.51 billion yuan, a year-on-year increase of 23.4%; The net profit attributable to the parent company was 1.91 billion yuan, a year-on-year increase of 10.9%. The overall performance is slightly lower than the market expectation, but it still maintains a steady and progressive trend.
The strategic transformation brought short-term pain, and the fund consignment business performed well. In terms of business segments: 1) the revenue of value-added telecommunications services was 1.62 billion yuan, with a year-on-year increase of 26.0%. As the business cornerstone and key technology investment field of the company, it still maintained stable growth. 2) The revenue from software sales and maintenance reached 300 million yuan, with a year-on-year increase of 22.6%. 2B businesses such as Ifind financial data terminal continued to seize the market share with the advantage of high cost performance. 3) Advertising and Internet business promotion services achieved a revenue of 1.38 billion yuan, with a year-on-year increase of 53.6%, mainly due to the increase in user activity of the company, supplemented by unique neutrality advantages, and the diversion marketing services of various institutions showed a high-speed growth trend. 4) The income from fund sales and other transaction fees was 310 million yuan, a year-on-year decrease of 35.3%, mainly due to the adjustment of the company’s business strategy and the reduction of commission fees for other business consignment; However, it is worth noting that the company’s “love fund” platform has access to 171 fund companies and securities companies, and 14322 fund products and asset management products have been sold on a commission basis. The fund commission business income has increased by 72.9% year-on-year, with a rapid growth momentum. With the continuous migration of residents’ asset allocation to partial equity funds, it is expected that the company will gradually go through the painful stage of transformation in the future, and the third-party fund consignment, which occupies the advantage of card position, is expected to become a new engine for the company’s income growth.
Relying on the flow moat, continue to increase R & D investment and improve the realization space. The company’s traffic barrier is still high, and its Hithink Royalflush Information Network Co.Ltd(300033) app’s monthly activity has been maintained at more than 30 million for a long time, significantly ahead of the second and third competitive products. Under the huge user base, the company continues to invest in artificial intelligence and other fields to continuously strengthen the competitiveness of its financial information services, investment and financial analysis tools and other products. During the reporting period, the number of employees of the company increased by 692 compared with the same period last year, including 10 employees with doctoral degrees. The annual R & D investment was 830 million yuan, a year-on-year increase of 41.6%, and the R & D expense rate reached 23.6%, a year-on-year increase of 3.02pp. Although the high investment will affect the profit performance in the short term, the company’s AI platform technology has gradually matured. In the future, it is expected to rely on the flow advantage to dig deep into the user value to improve the payment conversion rate and ARPU value. The medium and long-term logic is still good.
Profit forecast and investment suggestions. It is expected that the compound growth rate of the company’s net profit attributable to the parent company will reach 25.0% from 2022 to 2024. On the whole, the company’s business income has a strong correlation with the market trading volume, but the company’s fundamental logic has not been weakened: relying on the traffic resources with high barriers, relying on AI technology to deeply tap the user value, continuously enrich the realization channels, and fully enjoy the high growth dividend in the pro cycle. Based on the industry valuation and the company’s historical valuation level, it conservatively gives 32 times PE in 2022, corresponding to the target price of 143.68 yuan, maintaining the “buy” rating.
Risk tip: sharp decline in market trading activity, changes in market regulatory policies, intensified industry competition, etc
