\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 588 Yonyou Network Technology Co.Ltd(600588) )
Matters:
The company announced in its 2021 annual report that in 2021, it achieved an operating revenue of 8.932 billion yuan, a year-on-year increase of 4.7%, a net profit attributable to the parent company of 708 million yuan, a year-on-year decrease of 28.2%, and EPS of 0.22 yuan. The profit distribution plan for 2021 is: it is proposed to allocate 1 yuan (including tax) for every 10 shares, and the capital reserve will not be converted into share capital.
Ping An View:
The company’s revenue grew steadily, stripped off its financial services business and focused on cloud services and software business. In 2021, the company firmly promoted business transformation and structural adjustment, and achieved a structural breakthrough of better quality in business revenue. The company successively divested changjietong payment, Youjin holding and other financial service businesses, focusing on its main cloud service and software business. In 2021, the company achieved an operating revenue of 8.932 billion yuan, a year-on-year increase of 4.7%, and the revenue increased steadily. Among them, the revenue from cloud services and software business was 8.641 billion yuan, a year-on-year increase of 15.7%, accounting for 96.74% of the company’s revenue; The revenue from financial services business was 291 million yuan, a year-on-year decrease of 72.5%, accounting for 3.26% of the company’s revenue. The company has basically completed the divestiture of financial service business. The net profit attributable to the parent company was 708 million yuan, a synchronous decrease of 28.2%, mainly due to the large year-on-year increase in expenses during the period.
The gross profit margin of the company was basically flat year-on-year, the expense rate increased year-on-year, and the R & D investment continued to increase. The gross profit margin of the company was 61.25% in 2021, which was basically the same as that of 61.05% in 2020. During 2021, the expense ratio of the company was 54.65%, an increase of 6.97 percentage points year-on-year, mainly because the company continued to upgrade the sales organization system, increase the coverage of customers and business promotion, and the sales expense of the company increased significantly by 31.7% year-on-year. The company continues to increase R & D investment, introduce relevant high-end R & D talents, enhance the platform capability and core application capability of cloud service products, and continuously optimize product performance. The company’s R & D investment in 2021 was 2.354 billion yuan, a year-on-year increase of 40.7%, and the revenue of R & D investment accounted for 26.4%, a year-on-year increase of 6.8 percentage points. The net operating cash flow of the company in 2021 was 1.304 billion yuan, exceeding the net profit attributable to the parent company in the same period by 596 million yuan.
The company’s 3.0-ii strategy has been implemented for two years, and the cloud subscription business has a good momentum of development. 2021 is the second year of the implementation of the company’s 3.0-ii strategy. The company’s cloud service business realized a revenue of 5.321 billion yuan, with a year-on-year increase of 55.5%, accounting for 61.6% of the revenue of cloud service and software business, with a year-on-year increase of 15.8 percentage points, which has become the main source of the company’s revenue. In addition, guided by the breakthrough of high-quality business income structure, the company fully implements the subscription priority strategy, gives priority to the development of public cloud subscription business, and guides private cloud customers to pay by subscription. In 2021, the company’s cloud service subscription arr reached 1.65 billion yuan, and the contract liabilities related to cloud subscription were 847 million yuan. The contract liabilities related to cloud subscription increased by 79.0% year-on-year, laying a solid foundation for the high growth of the company’s subscription revenue in the future. The company’s cloud subscription business has a good momentum of development, and the revenue structure of cloud service business will continue to be optimized.
The layered operation of the company has been continuously promoted with remarkable results. In 2021, the company firmly promoted the cloud transformation strategy and continued to implement layered and targeted operation. Facing the large-scale enterprise customer market, seizing the opportunities of digital intelligence and information innovation localization in the large-scale enterprise market, the amount of large orders of more than 5 million increased by 45% year-on-year, and some customers signed contracts of more than 100 million, further expanding the company’s leading position in the large-scale enterprise service market. The cloud service and software business of large enterprise customers realized a revenue of 5.870 billion yuan, a year-on-year increase of 17.0%, of which the cloud service business realized a revenue of 3.735 billion yuan, a year-on-year increase of 45.4%. The company has achieved an overall breakthrough in signing contracts with more than 10 central enterprise level units, and the business promotion of digital intelligence solutions in vertical industries such as finance, telecommunications and radio and television, tobacco, automobile and so on has been smooth. Facing the customer market of medium-sized enterprises, the company structurally strengthened the market business of medium-sized enterprises, and yonsuite, u9c and u8c formed a strong product portfolio to meet the different needs of medium-sized enterprise customers. The market competitiveness of medium-sized enterprises has been restored and enhanced. The cloud service and software business of medium-sized enterprise customers realized a revenue of 907 million yuan, a year-on-year increase of 13.0%, of which the cloud service business realized a revenue of 393 million yuan, a year-on-year increase of 150.3%. Facing the customer market of small and micro enterprises, changjietong, a subsidiary of the company, continues to focus on the field of digital intelligence finance and taxation and digital intelligence business, comprehensively turns to the public cloud service business, and continues to lead the market in the field of small and micro enterprise finance and taxation cloud service. The cloud service and software business of small and micro enterprise customers realized a revenue of 596 million yuan, a year-on-year increase of 15.7%, of which the cloud service business realized a revenue of 509 million yuan, a year-on-year increase of 111.2%. The company’s layered operation has achieved remarkable results and further enhanced its market competitiveness.
Profit forecast and investment suggestions: according to the company’s 2021 annual report, we adjusted the performance forecast and estimated that the net profit attributable to the parent company from 2022 to 2024 would be 928 million yuan (the former value was 1.456 billion yuan), 1.139 billion yuan (the former value was 1.864 billion yuan) and 1.429 billion yuan (New), and EPS would be 0.27 yuan, 0.33 yuan and 0.42 yuan respectively. The PE corresponding to the closing price on March 18 would be 94.2, 76.7 and 61.2 times respectively. The company has been engaged in enterprise service for 34 years and is the largest enterprise application software service provider in China. At present, the company grasps the market opportunities of digital intelligence, localization and globalization, firmly implements the 3.0-ii strategy, firmly transforms the cloud service business, promotes peacekeeping and accelerates the development of cloud service business. The company’s cloud service business revenue continued to grow rapidly and the revenue structure continued to be optimized. With the continuous promotion of the company’s 3.0-ii strategy, the core position of the company’s cloud service business will be further strengthened, and the cloud service business can continue to grow at a high speed in the future. Although the company’s current performance is under pressure, we are optimistic about the future development of the company’s 3.0-ii strategy and maintain the “recommended” rating of the company.
Risk tips: (1) software business development does not meet expectations. The company’s enterprise management software business represented by ERP has been facing fierce competition from competitors outside China. If the company cannot continue to maintain the leading technology and products in the future, or the IT expenditure of some enterprise customers slows down, there will be a risk that the development of the company’s software business will not meet expectations. (2) The expansion of large enterprise customers is lower than expected. Yonbip is the core product of the company’s 3.0-ii strategy and undertakes the important task of developing the customer market of large enterprises. If the company’s demand for large-scale customers and products continues to be lower than the expected demand of large-scale customers, the company’s products will not be able to meet the requirements of large-scale customers. (3) The cloud transformation of small, medium-sized and micro enterprise customers is lower than expected. The company accelerated the business transformation and development from software to cloud services in medium-sized enterprise customers, and comprehensively promoted the cloud service business priority and subscription priority strategy in small and micro enterprise customers. However, if the company’s customer acceptance of cloud products for small, medium-sized and micro enterprise customers is lower than expected, the company’s cloud transformation of small, medium-sized and micro enterprise customers will have lower than expected risks.
