Beijing United Information Technology Co.Ltd(603613) (603613)
B2B e-commerce and industrial Internet leader, with continuous high growth in performance
The company is a leading B2B e-commerce and industrial Internet enterprise in China, By virtue of Guolian resource network (B2B information service platform), Duoduo platform (B2B vertical e-commerce trading platform) and Guolian cloud (Internet technology service platform), we provide customers with online commodity trading, business information services and Internet technology services of industrial products and raw materials respectively, and build “information + transaction + service” Industrial closed loop. In recent years, with the rapid development of e-commerce for industrial products and the company’s benign business model, the company’s performance has achieved rapid development. The revenue has increased from 203 million yuan in 2015 to 17.158 billion yuan in 2020, with an average annual compound growth rate of 142.88%. The corresponding attributable net profit after deduction has also increased from 10.76 million yuan to 267.5 million yuan, with an average annual compound growth rate of 90.15%, In 2021, Q3 achieved a revenue of 23.475 billion yuan, a year-on-year increase of 134.01%, a net profit of 306 million yuan after deduction, a year-on-year increase of 86.74%, and its performance continued to grow high.
The low penetration rate of e-commerce of industrial products is expected to increase, and the market space is broad
In recent years, with the rise of Alibaba, jd.com, pinduoduo and other platforms, the e-commerce industry of consumer goods has developed rapidly, and the penetration rate has increased from 9.90% in February 2015 to 29.72% in November 2021. According to Bain’s data, the average annual compound growth rate of China’s industrial B2B e-commerce transaction scale has been as high as 30% since 2015 and reached about 700 billion yuan in 2019, but the online penetration rate is only 2.2%. Referring to the development process of consumer e-commerce, we believe that industrial B2B e-commerce is still in the early stage of development and has great room for improvement in the future under the promotion of national policies. According to Bain’s data, it is expected that by 2024, the B2B e-commerce penetration rate of industrial products is expected to reach 5%, the market scale will reach 2.3 trillion yuan, the average annual compound growth rate in the next few years will be 26.86%, and the industry will still maintain rapid development.
The growth logic is clear and has gradually become the leader of the Internet industry
The company’s performance continues to grow rapidly, mainly due to the company’s Three Growth Logic: 1) horizontal replication and vertical extension of vertical industries: the company’s Duoduo platform has increased from one industry in 2015 to nine industries in the semi annual report of 2021, with an average of 1-2 industries added every year. At present, Guolian resources network has more than 100 sub industries, which will become an incubator for more Duoduo platforms in the future, At the same time, extend the vertical industrial chain along the existing multi platform; 2) Continuous improvement of penetration rate: the penetration rate of most products is only about 2%. Considering only the member transformation of Guolian resources network, there is a lot of room for improvement, and the penetration rate of some single products has shown a steady trend of improvement; 3) Diversified service modes: supply chain finance, digital transformation, big data services, etc. starting from information and transaction and extending to downstream customers in the future. The company has formulated the industrial Internet development strategy supported by “platform, technology and data”, deeply cultivated the industry for many years, and has the first mover advantages of industry, customers, data and technology, It is expected to grow into a leading enterprise of industrial Internet platform in the future.
Profit forecast
We are optimistic about the development prospect of the e-commerce industry of industrial products and the leading position of the company. It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be 512, 872 and 1410 million yuan respectively, and the EPS will be 149, 253 and 4.10 yuan respectively. The current share price corresponds to 72, 43 and 26 times of PE respectively. It is covered for the first time and given a “recommended” investment rating.
Risk statement
The expansion of Duoduo platform is lower than expected, the risk of intensified competition, the risk of repeated epidemic, and the risk of macroeconomic downturn.
