\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 588 Yonyou Network Technology Co.Ltd(600588) )
Event overview
Yonyou Network Technology Co.Ltd(600588) issued the 2021 annual report on March 19. In 2021, the company realized an operating revenue of 8.932 billion yuan, a year-on-year increase of 4.7%; The net profit attributable to the parent company was 708 million yuan, a year-on-year decrease of 28.2%; The company’s cloud service and software business revenue was 8.641 billion yuan, a year-on-year increase of 15.7%, of which the cloud service revenue increased by 55.5% year-on-year to 5.321 billion yuan.
Cloud service revenue is growing rapidly, and the performance is under pressure during the transformation and upgrading period
Based on the company’s basic strategy of actively shrinking the software business and accelerating the transformation to cloud services, the cloud service business increased by 55.5% year-on-year, the software business decreased by 18.0% and the overall main business increased by 14.7% year-on-year. At present, the company is at the key node of structural upgrading and business transformation. The revenue and net profit are constrained by phased factors, and the growth rate has decreased. On the one hand, during the transformation from traditional license mode to subscription mode, the change of revenue mode to phased recognition will have an impact on the company’s revenue in the short term, but after the transformation is basically completed, it will be conducive to bring more considerable revenue to the company; On the other hand, the company achieved rapid growth in orders for large projects in the second half of the year. Due to the complex implementation process of large projects and the relatively long delivery cycle, the revenue recognition may be delayed. In the future, with the support of the wave of digital economy and its own technical strength, the company’s revenue and net profit are expected to usher in high growth.
The market of large-scale enterprises continues to expand, and the layered operation results continue to appear
Relying on the localization of Xinchuang and the digital economy, the company actively explored the market of large enterprises. In 2021, it successfully won the favor of a series of large central and state-owned enterprises such as China Nuclear Power Group, state investment group, Aerospace Hi-Tech Holding Group Co.Ltd(000901) group and China Mobile. It made an overall breakthrough in signing contracts with more than 10 units at the level of central enterprises, realizing a year-on-year increase of more than 5 million large orders, and the signing amount of some customers exceeded 100 million yuan. Based on the principle of hierarchical operation, the company seizes market opportunities and constantly consolidates its leading position. In the large enterprise market, yonbip, the company’s core product, achieved a breakthrough growth in public cloud subscription business in the fields of fee control, taxation and manpower, with cloud service revenue reaching 3.735 billion yuan, a year-on-year increase of 45.4%; In the medium-sized enterprise market, the company focuses on specialized and special new customers. Yonsuite has nearly 3000 new customers, and the cloud service revenue reached 393 million yuan, a year-on-year increase of 150.3%. In the small and micro enterprise market, changjietong achieved rapid growth in public cloud business in the fields of finance, taxation and commerce, with cloud service revenue of 509 million yuan, a year-on-year increase of 111.2%.
Strengthen product strategy, increase R & D investment, and achieve remarkable results in the transformation of subscription mode
This year, the company invested 2.354 billion yuan in R & D, a year-on-year increase of 40.7%, accounting for 26.4% of revenue. Yonbip, the company’s core product, completed four version iterations, further strengthened the ability of cloud platform, and added 193200 cloud service paying customers. Yonsuite products take two weeks as the iteration cycle, and has the ability to provide solutions for more than 20 industries, with customers covering more than 30 industries. In addition, the company officially launched u9cloud products for medium and large manufacturing enterprises, providing a variety of cloud services including manufacturing, supply chain and project management, focusing on the high-quality growth of specialized and new customer groups. In order to achieve a high-quality breakthrough in the revenue structure, the company adheres to the subscription priority strategy and actively guides customers to pay according to the subscription method. This year’s model transformation achievements were realized, the subscription revenue achieved rapid growth, the cloud service arr achieved 1.65 billion yuan, a year-on-year increase of 79.0%, and the contract liabilities related to cloud subscription increased by 79.0% year-on-year.
Investment advice
Catalyzed by the wave of localization of Xinchuang and the digital economy policy, the company continues to explore the market of large enterprises and promote the penetration of public cloud products and the transformation of subscription mode. In the future, as the orders of large projects are fulfilled one after another and the impact of income in the transition period subsides, the company’s revenue is expected to usher in rapid growth. We expect the company to achieve revenue of RMB 11.486139.94/17.469 billion from 2022 to 2024, with a year-on-year increase of 28.6% / 21.8% / 24.8%; The net profit attributable to the parent company was RMB 991 / 1261 / 1484 million, with a year-on-year increase of 40.0% / 27.2% / 17.7%, maintaining the “buy” rating.
Risk tips
1) R & D breakthrough is less than expected; 2) Policy support is less than expected; 3) Project delivery was less than expected.
