\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event: the company released its 2021 annual report, with revenue of 3.28 billion (+ 45.1%), net profit attributable to the parent company of 1.04 billion (+ 18.6%), deduction of non net profit of 840 million (+ 37.3%), and operating net cash flow of 1.86 billion (+ 23.1%). The core operating data of the annual report is basically consistent with the disclosure of the previous performance express.
The growth of institutional authorization business is the most significant, while the growth of R & D and other expenses leads to the growth rate of deduction of Non Profits lower than that of revenue. In terms of business, driven by the accelerated implementation of Xinchuang, the company’s institutional authorization business increased by 107% to 962 million, while the personal office service subscription and institutional subscription business maintained stable and rapid growth, with revenue increasing by 44.2% and 23.4% to 1465 million and 446 million respectively. The Internet advertising business decreased by 3.0% to 405 million due to the active reduction of advertising push. The growth rate of net profit deducted by the company was lower than that of income, mainly due to the significant increase of 52.2% in the company’s R & D expenses to 1.08 billion and the increase of 41.55 million yuan in share based payment expenses.
The operation data of personal office service subscription business performed well, and the total amount of related subjects received in advance increased rapidly. The company continued to maintain the good performance of various operation data. The monthly active equipment of main products increased by 14.05% to 544 million, of which the monthly activity of the core PC version increased by 15.87% to 219 million, which continued to be higher than the overall monthly activity growth; The cumulative annual number of paying individuals increased by 29.3% to 25.37 million, the per capita payment also increased to 57.7 yuan, and the number of cloud storage documents increased to more than 130 billion from 89.8 billion last year. At present, the total content resources of rice husk material library exceed 100 million copies, and the total downloads in the whole year exceed 700 million times. We believe that the continuous and rapid growth of monthly PC activity and the continuous and rapid improvement of paying users will support the continuous and rapid growth of the company’s personal office services. In addition, at the end of 2021, the company reflected that the total amount of advance receipts (contract liabilities, other current liabilities and other non current liabilities) was 1.682 billion, an increase of 73.2% over the same period of last year and 22.4% quarter on quarter, realizing accelerated growth, reflecting the good expectation of rapid growth of subscriptions in the future.
Institutional subscription service products and market side have made breakthroughs, and this year is expected to usher in a development inflection point. Since the company added “cooperation” into the company’s core strategy at the end of 2020, the company has continued to increase its layout from the two levels of products and sales. Last year, the company launched a digital office platform supported by two middle platforms of document and collaboration, which greatly improved the richness and overall solution ability of organization oriented collaborative office products. We believe that the improvement of the product end will lay a solid foundation for the development of the company’s institutional subscription business. During the reporting period, the company provided Yunnan and other places with the integrated solution of Xinchuang office end cloud, and also achieved a substantial breakthrough in the large group customer market of finance, energy, operators and other industries. We believe that the company’s institutional subscription business has more space and potential than personal service subscription. At present, the completeness of the product end and the breakthrough in market promotion are expected to see the inflection point of relevant business development this year.
After slightly adjusting the revenue growth rate, gross profit margin and expense rate, we predict that the company’s EPS in 22-24 years will be 2.94/3.87/5.14 yuan respectively (the original EPS in 22-23 years was 3.26/4.47 yuan). Since the company’s roe (weighted) is at a high level compared with comparable companies, according to the PE level of comparable companies for 22 years, we give the company a 10% premium, corresponding to 74 times of PE for 22 years, and the target price is 217.56 yuan, maintaining the overweight rating.
Risk tips
The risk that localization substitution is less than expected; The risk that the conversion rate of payment is lower than expected;
