\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 588 Yonyou Network Technology Co.Ltd(600588) )
Event: on the evening of March y]18, the company released the annual report of 2021. During the reporting period, the operating revenue was 8.932 billion yuan, a year-on-year increase of 4.7%, of which the cloud business revenue was 5.320 billion yuan, a year-on-year increase of 55.5%; The net profit attributable to the parent company was 708 million yuan, a year-on-year decrease of 28.2%, the net profit deducted was 405 million yuan, a year-on-year decrease of 55.3%, and the operating cash flow was 1.303 billion yuan, a year-on-year decrease of 19.2%. The growth of revenue and the decrease of profit were mainly caused by the deferred revenue of cloud transformation, the increase of large customer orders and the implementation of delivery and subcontracting in the second half of the year.
The cloud transformation is firm and the revenue structure continues to be optimized. During the reporting period, the company successively stripped off its financial services business, took the initiative to shrink its software business, accelerated its cloud transformation and structurally enhanced its subscription business. The company’s main cloud service and software business realized a revenue of 8.641 billion yuan, a year-on-year increase of 15.7%, of which the software business revenue decreased by 18%, the cloud service revenue realized 5.320 billion yuan, a year-on-year increase of 55.5%, and the cloud service revenue accounted for 61.6%, an increase of 15.8% over the previous year. It has become the main source of revenue of the company, and the revenue structure continues to upgrade. In terms of gross profit margin, the gross profit margin of cloud services and software business was 60.2%, an increase of 0.2 percentage points over the previous year. In addition, the key indicator of cloud business arr reached 1.65 billion yuan, and the contract liabilities related to cloud subscription increased by 79.0% year-on-year, laying the foundation for the sustained and rapid growth of the company’s subscription revenue and the continuous upgrading of the company’s business revenue structure. We believe that the company’s transition from traditional licensed business to cloud subscription business will lead to a short decline in revenue growth and profits due to the change of revenue to segment recognition, but it will smooth the company’s business revenue and have a positive impact on long-term revenue growth. The rapid growth of indicators such as arr and cloud subscription contract liabilities indicates that the pace of the company’s cloud transformation is further accelerated, and we are optimistic about the progress of the company’s cloud transformation.
R & D investment continues to increase, and cash flow is under pressure in the short term. During the reporting period, the company’s R & D investment was 2.353 billion yuan, a year-on-year increase of 40.7%, accounting for 26.4% of revenue, an increase of 6.8 percentage points over the previous year. The company has significantly increased yongbip R & D personnel, with 7693 R & D personnel in the reporting period, an increase of 1446 over the beginning of 21 years. The products have been further polished. UFIDA BiP cloud platform has covered 10 fields, built more than 2300 enterprise service application models, provided more than 50 intelligent models and more than 1000 analysis application scenarios. In terms of cash flow, due to the increase of R & D personnel expenses and other factors, the operating cash flow decreased by 19.2% year-on-year to 1.303 billion yuan. We believe that the further increase of the company’s R & D investment in yonbip platform will comprehensively improve the product competitiveness and look forward to the long-term development prospect.
The strategy of “seizing the market” has blossomed and fruited, and the ecological system has been gradually improved. During the reporting period, the company gradually promoted the implementation of subcontracting outsourcing, upgraded the construction of direct selling system and ecological partner system to seize the market. In terms of paying users, the company added 193200 cloud service paying customers, and the cumulative number of cloud service paying customers excluding financial cloud service customers was 438300. The company seized market opportunities and further expanded its customer base. In terms of ecological construction, the company has strengthened the ecological construction path centered on “UFIDA BiP”. By promoting the integration strategy of strategic alliance, integration and integration, cloud market, service integration and platform operation, the company has implemented five ecological plans, with more than 2200 business partners, 970 ISV partners (including 530 changjietong ISV partners) and more than 1700 cooperative banks, Yonstore, a cloud market application mall, has more than 10000 settled partners, more than 15000 settled products and 126 listed integrated products. We believe that the company has seized market opportunities and continued to strengthen its competitiveness in various markets, and the cloud payment group has increased significantly. In addition, by strengthening the ecological construction with “UFIDA BiP” as the core and playing the combined fist of “platform + ecology”, the awareness and influence of UFIDA BiP have increased steadily.
Focusing on the large enterprise market, the contract amount of super large customers increased steadily. During the reporting period, the company seized the opportunities of intellectualization of large customers and localization of Xinchuang. The revenue of large customer market was 5.87 billion yuan, a year-on-year increase of 17.0%, including cloud service revenue of 3.734 billion yuan, a year-on-year increase of 45.4%, and software business revenue decreased by 12.7%. In terms of super large enterprise customers, the company’s large-scale order amount of more than 5 million yuan increased by 45% year-on-year, and achieved an overall breakthrough in signing contracts with more than 10 first-class units of central enterprises. The business promotion of digital intelligence solutions in vertical industries such as finance, telecommunications and radio and television, tobacco and automobile was smooth, and customers such as Aerospace Hi-Tech Holding Group Co.Ltd(000901) , national development and investment group, China Everbright Bank Company Limited Co.Ltd(601818) , postal savings bank of China, China Galaxy Securities Co.Ltd(601881) securities and so on were successfully signed. In terms of products, the company has successively released yongbip flagship versions 202102, 202105, 202109 and 202111, and nccloud has realized all lightweight upgrades. We believe that the company continues to polish its own platforms and products, consolidate its large-scale market position, achieve stable growth in the high-end market under the trend of digital intelligence transformation of central enterprises, have obvious advantages in the service market of super large enterprises, and are expected to maintain the steady growth trend of large-scale market revenue in the future.
Structurally strengthen the business in the medium-sized market and highlight the advantages of product portfolio. During the reporting period, the company continued to accelerate the cloud transformation of the medium-sized market. The revenue of the medium-sized market was 907 million yuan, a year-on-year increase of 13.0%, including cloud service revenue of 393 million yuan, a year-on-year increase of 150.3%, and software business revenue of 513 million yuan, a year-on-year decrease of – 20.4%. In terms of products, yonsuite 202109 Standard Edition and professional edition were successfully launched, the product performance was greatly improved, and mass coverage and promotion were carried out for potential customers, with 3000 new customers throughout the year; U9 cloud grabbed the leading enterprise of “specialized and special new”, successfully signed contracts with more than 300 small giant enterprises such as Changzhou naconor, Nanxing Equipment Co., Ltd. and Shandong nuclear power equipment, broke through large-scale development, achieved rapid income growth, and won the first place in 2021 manufacturing cloud ERP; U8 cloud focuses on modern service industry, trade circulation industry, real estate construction industry and process manufacturing industry, and signs contracts with a series of well-known enterprises such as Xinjiang Jiuding agricultural group and Daphne investment (Group). We believe that the company grabs the medium-sized customer market through yonsuite + u9c + u8c product portfolio, and increases market coverage by upgrading direct sales, channels and ecological partner system. In the future, cloud service revenue in the medium-sized market is expected to maintain a high growth rate.
The small and micro market is moving towards cloud business transformation in an all-round way, with high growth of paying users. The company implemented the strategy of giving priority to cloud business and subscription. The proportion of cloud business revenue of changjietong, a holding subsidiary, increased from 46% last year to 86%, realizing the comprehensive transformation of cloud business. In terms of revenue, during the reporting period, the company’s small and micro enterprise market achieved revenue of 595 million yuan, a year-on-year increase of 15.7%, including cloud service revenue of 509 million yuan, a year-on-year increase of 111.2%. In terms of customers, the cloud service business added 180000 paying users, an increase of 201% over the previous year, and the cumulative service users of cloud business reached 397000. In addition, according to the special analysis 2021 on cloud finance and taxation market of small and micro enterprises in China released by Analysys, changjietong ranks first in the comprehensive strength of cloud finance and taxation service providers, and changjietonghao accounting ranks first in the coverage of cloud finance and taxation market. We believe that the number of customers of the company in small and micro enterprises has increased significantly, and it is expected to maintain a high growth rate in the small and micro enterprise market in the future, consolidate its own advantages by using the cloud subscription system, and maintain a solid leading position in the small and micro enterprise market.
Profit forecast and valuation rating. The company’s cloud transformation progress is stable, the core indicators of cloud revenue are excellent, the growth of large markets is stable, and the market strength of small and medium-sized enterprises is significantly enhanced. We estimate that the operating revenue of the company from 2022 to 2024 will be RMB 11.288/14.320/17.985 billion respectively, the net profit attributable to the parent company will be RMB 816/10.06/1.213 billion respectively, and the PE will be 107 / 87 / 72. Maintain the “buy” rating.
Risk tips: 1 Intensified market competition; 2. The promotion of cloud business is lower than expected; 3. Macroeconomic downturn.
