\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event: on March 24, the company released the annual report for 2021, realizing a business income of 328006 million yuan, an increase of 45.07% over the same period of last year; The net profit attributable to the owners of the parent company was 104125 million yuan, an increase of 18.57% over the same period of last year; The net profit attributable to the parent company after deducting non profits was 840.42 million yuan, an increase of 37.32% over the same period of last year, in line with the express level of the previous period. On the same day, the company issued the 2022 restricted stock incentive plan (Draft), which proposed to grant 1 million restricted shares to the incentive object at a price of no less than 45.86 yuan / share.
The personal subscription business grew rapidly, and the monthly living and payment rate increased steadily. 1) During the reporting period, the revenue from personal office service subscription business was 1.465 billion yuan, an increase of 44.20% over the same period of the previous year, mainly because the company promoted the cloud of users, improved the use of payment functions and promoted the continuous increase of the number of paying people by continuously optimizing the functional experience on the basis of the stable growth of the number of monthly active devices of main products. In terms of monthly activity, as of December 2021, the number of monthly active equipment of the company’s main products was 544 million, with a year-on-year increase of 14.05% and a month on month increase of about 3.66%. Among them, the monthly life of PC version was 219 million, with a year-on-year increase of 15.87 and a month on month increase of about 6.28%; The monthly life of the mobile version was 321 million, with a year-on-year increase of 13.83% and a month on month increase of about 3.25%, with a steady momentum. In terms of payment, as of December 2021, the company has accumulated about 25.37 million annual paid individual users, with a year-on-year increase of 29.31%. We estimate the payment rate based on the ratio of the cumulative number of annual paid individual users to the monthly life of the PC version. The payment rate at the end of December 2021 is about 11.59%, which is a step higher than the level of about 10.99% at the end of June 2021. 2) At the same time, the number of cloud documents actively uploaded by users has maintained a rapid growth, and the proportion of long-term paid users has increased, which has promoted the company’s personal subscription business to continue to maintain a rapid growth trend and laid a good foundation for the continuous growth of personal subscription business in the future. By the end of 2021, the company has accumulated more than 7 million annual super members, and the company has helped users store about 130 billion files on the public cloud.
Xinchuang drives the explosive growth of authorization, and cloud and collaboration help institutions to subscribe and penetrate. 1) In terms of authorization, during the reporting period, the company achieved an authorized business income of 962 million yuan from Chinese institutions, an increase of 107.10% over the same period of the previous year, mainly due to the fact that China’s information and innovation industry has entered the development period. With the support of policies, the market space has expanded significantly, the demand of government and enterprise users has increased significantly, and the orders of the company’s streaming office software products are rich, which has accelerated the penetration of the company’s information and innovation products. At the same time, according to the company’s announcement, driven by the dual engine of policy guidance and industry demand, the penetration rate of industry information and innovation continued to increase. During the year, a number of pilot projects were opened in key areas represented by financial information and innovation to promote the development of information and innovation industry. The company has actively participated in various pilot projects in the financial industry, and the basic office service capability of the information innovation platform has been demonstrated, which has helped the rapid replication of the company’s end cloud integration model in the information innovation industry. 2) In terms of subscription, during the reporting period, the company achieved institutional subscription and service revenue of 446 million yuan, an increase of 23.40% over the same period of the previous year, mainly because the company actively promoted the transformation of Chinese institutional customers from traditional independent end office to cloud and collaborative office, which also laid a good foundation for the company’s subsequent promotion of digital office platform. In the government enterprise market, the company continues to enable a number of business scenarios through professional office software products and the advantages of end cloud integration, helping the government and customers in finance, energy, operators, construction, metallurgy, people’s livelihood and other industries to carry out digital transformation. In the public cloud market, by the end of 2021, the number of registered enterprises in the company’s public cloud market had exceeded one million. Based on the continuous optimization of product capabilities, enterprise user stickiness and product reputation have been continuously improved, the proportion of users upgrading and using enterprise document space has doubled, the utilization rate of collaboration light documents has doubled, and the proportion of active team collaboration in typical enterprises has been increasing. 3) In terms of Internet advertising promotion and other businesses, the company achieved a revenue of 406 million yuan in 2021, a year-on-year decrease of 3.01%, mainly because the company continued to maintain the trend of strategic adjustment, adhered to the principle of optimizing user experience, and continued to take the initiative to reduce the number of advertising bits and push frequency.
The overall cost rate increased, and short-term investment laid the foundation for long-term development. 1) During the reporting period, the company realized sales expenses of 695 million yuan, an increase of 43.94% year-on-year, accounting for 21.19% of revenue, a decrease of 0.16 percentage points over the same period of last year, mainly due to the increase of personnel salary and publicity expenses. The management fee was 326 million yuan, a year-on-year increase of 53.38%, accounting for 9.94% of the income, an increase of 0.54 percentage points over the previous year, mainly due to the increase of personnel salary and the implementation of restricted stock incentive plan. 2) The R & D expenditure was 1.082 billion yuan, a year-on-year increase of 52.15%, accounting for 32.98% of the revenue, an increase of 1.54 percentage points over the same period last year, mainly due to the increase of personnel salary. In terms of the number of employees, by the end of 2021, the company had 4199 employees, a year-on-year increase of 48.69%, including 2811 R & D personnel, an increase of 933 compared with the end of the previous period. In the field of product R & D, focusing on the future office evolution trend of cloud and collaboration, the company actively carried out product layout, developed and released Jinshan digital office platform, which greatly improved the richness and overall solution ability of the company’s organization oriented collaborative office products, and provided solid product support for the next development of the company’s organization subscription and organization authorization business.
Equity incentive binds core talents and boosts the long-term development of the company. 1) According to the announcement of the company, in terms of quantity, the incentive plan plans to grant 1 million restricted shares to the incentive objects, accounting for about 0.22% of the total share capital; Among them, 800000 shares were granted for the first time and 200000 shares were reserved. In terms of price, independent pricing is adopted, which is no less than 45.86 yuan / share. 2) In terms of assessment, based on the operating income in 2021, the target value is about 15% of the compound growth rate from 2022 to 2024; The trigger value is about 10% of the compound growth rate from 2022 to 2024. We expect that the assessment objectives may not have a significant impact on our own business. 3) In terms of expenses, assuming that restricted shares are granted at the end of May 2022, the amortization of share based payment expenses from 2022 to 2025 will be RMB 40.05 million, RMB 48.86 million, RMB 21.98 million and RMB 6.21 million respectively. 4) In terms of objects, 127 core managers and technical backbones are planned to be encouraged this time, which will help the company bind core talents and boost the long-term development of the company.
Domestic office cloud is the leader, and its long-term growth is continuously verified. 1) Since the transformation of the company from “providing tool products” to “application services”, the revenue of authorized services has been stable, and with the increase of paying customers, the revenue of subscription services has increased rapidly; In December 2020, the company took collaboration as a new core product strategy to further promote cloud office. 2) In the cloud mode, the business and data are on the cloud. The company can expand the scale of users, increase customer stickiness, and continuously derive value-added services through data mining. At the same time, the company released three new collaborative products and a digital office platform in December, 21, which further enables the cloud and collaboration needs of medium and large organizations, and is expected to further improve the penetration of end products and the ARPU value of single customers. With the gradual expansion of Xinchuang and the continuous penetration of 2C and 2b markets, the company is expected to open up long-term growth space.
Maintain the “buy” rating. According to key assumptions and recent announcements to adjust the profit forecast, we expect the company’s revenue to be 4.545 billion yuan, 6.159 billion yuan and 8.020 billion yuan from 2022 to 2024, and the net profit attributable to the parent company to be 1.385 billion yuan, 1.844 billion yuan and 2.515 billion yuan respectively.
Risk tip: the risk of cloud promotion is less than expected, the risk of intensified industry competition, and the risk of macro environment.
