\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event: on February 25, the company issued the announcement of 2021 annual performance express, realizing a total operating revenue of 3.28 billion yuan, a year-on-year increase of 45.07%; The net profit attributable to the owners of the parent company was 1.042 billion yuan, a year-on-year increase of 18.68%; The net profit attributable to the owner of the parent company after deducting non recurring profits and losses was 841 million yuan, with a year-on-year increase of 37.47%, in line with market expectations.
Revenue and non net profit deducted grew steadily, and the division of revenue may be adjusted. 1) During the reporting period, the company achieved a total operating revenue of 3.28 billion yuan, a year-on-year increase of 45.07%; The net profit attributable to the parent company was 1.042 billion yuan, a year-on-year increase of 18.68%; Net profit deducted from non parent company was 841 million yuan, with a year-on-year increase of 37.47%. The main reason is that the increase of operating revenue brings about the increase of net profit; In addition, the non recurring profit and loss in the same period of last year includes the investment income of the acquisition of digital science and network dimension. According to the previous financial report, in 2020, the company realized about 85.24 million yuan of “profit from remeasuring the equity held before the purchase date at fair value”, which is expected to be mainly contributed by the investment income from the acquisition of digital science and technology network. 2) In addition, it is worth noting that, compared with the third quarterly report of 2021 and previous financial reports, the division caliber of the company’s performance express may be adjusted to some extent. According to the 2020 annual report, the company achieved a business income of 2.261 billion yuan, including 803 million yuan of office software licensing business and 1.109 billion yuan of office service subscription business; Internet advertising promotion business: RMB 349 million; Other businesses amounted to 23 million yuan. 3) According to this performance express, the company has realized a business income of 3.28 billion yuan, including: (1) personal subscription business of 1.465 billion yuan, corresponding to about 1.017 billion yuan in 2020. We expect that it mainly comes from the payment of C-end individual user members; (2) Institutional subscription and service business is 446 million yuan, corresponding to 363 million yuan in 2020. We expect that it will mainly come from the annual subscription fee of enterprise users and venue authorization fee; (3) The institutional authorization business is RMB 962 million, corresponding to about RMB 465 million in 2020. We expect that it mainly comes from the authorization fees for the number of government and enterprise users; (4) Advertising and other businesses are 406 million yuan, corresponding to about 419 million yuan in 2020. We expect it to mainly come from Internet advertising and other business charges.
The strong demand for cloud and collaborative office drives the continuous growth of the company’s subscription business. 1) In terms of personal subscription, during the reporting period, China’s personal subscription business achieved an operating revenue of about 1.465 billion yuan, a year-on-year increase of about 44%. The main reason is that in 2021, with the continuous expansion of the user base of the individual user market, the company promoted the long-term transformation of users by enriching product functions, optimizing service quality and improving the free storage space of personal cloud documents, driving the sustained and rapid growth of personal subscription business. 2) In terms of institutional subscription, during the reporting period, China’s institutional subscription and service business realized an operating revenue of about 446 million yuan, a year-on-year increase of about 23%. The main reason is that the company seizes the demand of government and enterprise customers for data asset management and office efficiency improvement in the wave of digital economy, and continues to promote the transformation of government and enterprise users from traditional independent end office to cloud and collaborative office by broadening ecological channels, improving product system and improving service experience, so as to ensure the stable growth of China’s institutional subscription and service business, It also laid a good foundation for the promotion of subsequent digital office platform solutions. On December 22, 2021, the company released three new collaborative products and a digital office platform to further enable the cloud and collaboration needs of medium and large organizations, which is expected to further improve the product penetration of government and enterprise customers and the ARPU value of single customers. 3) In addition, based on the continuous enrichment of the company’s products and services in the cloud and collaborative office scene, the cloud collaborative office stickiness of individual and enterprise users continues to improve, promoting the acceleration of the cloud process in China’s individual subscription and China’s institutional subscription business. At the end of the reporting period, the total contract liabilities of the company exceeded 1.6 billion yuan, with a year-on-year increase of more than 70%.
With the deepening of the process of information innovation, the demand of government and enterprise users continues to increase. During the reporting period, with the maturity and quality improvement of the overall products of the information innovation industry, the information innovation process continued to deepen, the demand of government and enterprise users increased significantly, and the orders of the company’s streaming software products were rich, which promoted the explosive growth of China’s institutional licensing business. During the reporting period, the authorized business of Chinese institutions achieved an operating revenue of about 962 million yuan, a year-on-year increase of about 107%. With the continuous advancement of China’s information innovation process, the company’s institutional authorization business is expected to develop continuously.
Domestic office cloud is the leader, and SaaS opens the space for long-term growth. 1) Since the transformation of the company from “providing tool products” to “application services”, the revenue of authorized services has been stable, and with the increase of paying customers, the revenue of subscription services has increased rapidly; In December 2020, the company took collaboration as a new core product strategy to further promote cloud office. 2) In the cloud mode, the business and data are on the cloud. The company can expand the user scale and customer stickiness through a variety of product ecology, and continue to derive value-added services through data mining to further increase the ARPU value. With the gradual expansion of Xinchuang and the continuous penetration of 2C and 2b markets, the company is expected to open up long-term growth space.
Maintain the “buy” rating. According to the key assumptions and recent announcements to adjust the profit forecast, we predict that the company’s revenue from 2021 to 2023 will be 3.280 billion yuan, 4.578 billion yuan and 6.261 billion yuan (the previous forecast is 3.496 billion yuan, 5.061 billion yuan and 7.419 billion yuan), and the net profit attributable to the parent company will be 1.042 billion yuan, 1.452 billion yuan and 2.032 billion yuan respectively (the previous forecast is 1.193 billion yuan, 1.537 billion yuan and 2.049 billion yuan).
Risk tip: the risk of cloud promotion is less than expected, the risk of intensified industry competition, and the risk of macro environment.
