\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 588 Yonyou Network Technology Co.Ltd(600588) )
Event overview
On March 11, 2022, Yonyou Network Technology Co.Ltd(600588) issued an announcement on the share repurchase scheme of the company by means of centralized bidding transaction. The total capital of this share repurchase is 600 million-1 billion yuan, and the shares repurchased will be used for employee equity incentive.
Repurchase the company’s shares with 600-1 billion yuan for employee incentive and demonstrate the confidence and determination of the management
The total amount of the company’s repurchase this time is 600-1 billion yuan. If calculated according to the upper limit of repurchase price of 32.4 yuan / share, the number of shares repurchased this time is about 185185 million to 308642 million, accounting for about 0.54% to 0.90% of the total shares of the company. The company has launched share repurchase for two consecutive years to motivate employees, demonstrating the confidence and determination of the management.
The company’s share repurchase is used for equity incentive for future employees, which is conducive to maintaining the company’s value, further establishing and improving the company’s long-term incentive mechanism, effectively combining the interests of shareholders, the company and key employees, and boosting the implementation of the company’s strategic objectives. We believe that Yonyou Network Technology Co.Ltd(600588) is currently at the key node of “business integration + organizational change”. Employee incentive can better promote the realization and implementation of this goal, grasp the era opportunity of the superposition of localization, digitization and globalization, and realize the transformation of the company from ERP manufacturer to Enterprise Service SaaS manufacturer.
Strategically leading the market (from ERP to BIP), tactically focusing on breaking through the high-end market, has formed a double barrier of products and services
With the digital transformation of enterprises, the focus of enterprise digital construction has changed from “core system represented by ERP” to “cross system, cross field and whole process integration”, and the coverage has changed from “inside the core enterprise” to “virtual enterprise including upstream and downstream enterprises”, The construction goal has changed from “enterprise business process management” to “supporting enterprise product innovation, service innovation and model innovation” Yonyou Network Technology Co.Ltd(600588) comply with the changes of market demand and launch a business innovation platform – UFIDA BiP to lead the market strategically.
In recent years, Yonyou Network Technology Co.Ltd(600588) focuses on breaking through large & super large enterprises. These enterprises have complex business processes, high urgency of digital transformation and strong willingness to pay. They are the focus of China’s industrial digitization and belong to the high-end market in the field of digitization. Large & super large enterprises have high requirements for product capability (functional integrity, stability, etc.) and service capability (professional level of implementation consultants, response speed, etc.) and great exercise value Yonyou Network Technology Co.Ltd(600588) in terms of tactics, it focuses on entering the high-end market and has made breakthroughs repeatedly. It has formed double barriers to products and services. Under the background of localization, the substitution of foreign software is expected to accelerate.
The order data supports the strong demand for localization and is optimistic about the continuous breakthrough of large enterprise market in 22 years
In 2021, the localization demand / business opportunities faced by the company continued to be strong. From the public data, the direct sales contract amount of cloud + software of 2021q1-q3 company was 4.83 billion yuan, a year-on-year increase of 31.9%, higher than the growth rate of cloud + software revenue in the same period. Among them, the order amount of more than 5 million yuan increased by 59.1% year-on-year, further improving the year-on-year growth rate of 37.0% disclosed in H1, highlighting the strong localization demand of large downstream enterprises.
Focus on large-scale & super large enterprise market, and benchmark customers continue to make breakthroughs. Since 2021, relying on the two core products of yonbip and NCC, the company has successively won a number of benchmark customers, including Huawei, national development and investment group, Aerospace Hi-Tech Holding Group Co.Ltd(000901) group, China Post, China Pingmei Shenma Group and other state-owned enterprises and industry-leading benchmark customers, so as to firmly grasp the market opportunity and competitive advantage of large enterprises. Overall, the company will continue to expand central enterprises and industry leading customers in 2021, and the trend is expected to continue in 2022, strengthening the product layout and customer expansion of yonbip.
Improve the layered playing method and expand the capacity of small and medium-sized enterprise customers. Facing the customer market of medium-sized enterprises, the company achieved the leading market competitiveness of products with the help of yonsuite and u9cloud, and signed a number of model customers such as Zhonghe Puyuan, Hongji Weiye, Pylon Technologies Co.Ltd(688063) and so on; Facing the small and micro enterprise market, changjietong’s cloud service business revenue has achieved rapid growth and occupied the leading position in the cloud service market of small and micro enterprises. On the whole, it is judged that the company has now walked out of the lowest point, made a breakthrough at the inflection point in its entry into the high-end market and the transformation of cloud business, and passed the most difficult stage of traditional business decline + small cloud business base and weak contribution. The company firmly holds the market initiative of large enterprises and is expected to seize more market share and competitive advantage by virtue of yonbip advantageous products.
Investment advice
The entry into the high-end market and the transformation to the cloud have shown inflection point breakthroughs. Keep the profit forecast unchanged. From 2021 to 2023, the company’s operating revenue was RMB 9.60/12.09/15.87 billion respectively, with a year-on-year increase of 12.6% / 26.0% / 31.3%; It is predicted that the net profit attributable to the parent company in the three years will be RMB 900 / 11.7 / 1.72 billion respectively, with a year-on-year increase of – 9.2% / 30.2% / 47.4%, and EPS will be RMB 0.27/0.36/0.53 respectively, maintaining the buy rating.
Risk tips
1) the risk that the growth of software business is lower than expected; 2) The risk that the promotion of cloud products is lower than expected; 3) Intensified competition in ERP industry; 4) Macroeconomic downside risks.
