\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Matters:
The company announced in the annual report of 2021 that in 2021, the operating revenue was 3.28 billion yuan, with a year-on-year increase of 45.07%, the net profit attributable to the parent was 1.041 billion yuan, with a year-on-year increase of 18.57%, and the net profit deducted from non attributable to the parent was 840 million yuan, with a year-on-year increase of 37.32% and EPS of 2.2587 yuan. The profit distribution plan for 2021 is: it is proposed to allocate 7 yuan (including tax) for every 10 shares, and the capital reserve will not be converted into share capital.
Ping An View:
The company's operating revenue continued to grow rapidly. According to the company's announcement, in 2021, the company achieved an operating revenue of 3.28 billion yuan, with a year-on-year increase of 45.07%, and the revenue maintained a rapid growth. Among them, China's personal office service subscription business realized a revenue of 1.465 billion yuan, a year-on-year increase of 44.20%; China's institutional subscription and service business realized a revenue of 446 million yuan, a year-on-year increase of 23.40%; The revenue of authorized institutions in China increased by 10.79 billion yuan year-on-year; Internet advertising and other businesses realized a revenue of 406 million yuan, a year-on-year decrease of 3.01%. The net profit attributable to the parent company was 1.041 billion yuan, a year-on-year increase of 18.57%. Excluding the impact of non recurring profits and losses, the company's net profit deducted from non parent company was 840 million yuan, with a year-on-year increase of 37.32%.
The gross profit margin of the company decreased year-on-year, the expense rate increased year-on-year, and the R & D investment continued to strengthen. The gross profit margin of the company in 2021 was 86.91%, a slight decrease of 0.79 percentage points year-on-year. During 2021, the company's expense rate was 63.58%, with a year-on-year increase of 1.80 percentage points, mainly because the R & D expense rate increased by 1.54 percentage points year-on-year. Adhering to the concept of "building a business through technology", the company continues to strengthen R & D investment. In 2021, the company's R & D investment was 1.082 billion yuan, with a significant year-on-year increase of 52.15%, and the revenue of R & D investment accounted for 32.98%. In terms of operating cash flow, the net operating cash flow of the company in 2021 was 1.864 billion yuan, a year-on-year increase of 23.10%, exceeding the net profit attributable to the parent company by 823 million yuan in the same period, and the profit quality of the company remained at a high level.
The company's authorized business performed well. In 2021, China's information and innovation industry entered the development period. With the support of policies, the market space expanded significantly, the demand of government and enterprise users increased significantly, and the orders of the company's streaming office software products were rich, which accelerated the penetration of the company's information and innovation products and led the authorized business of Chinese institutions to continue to maintain explosive growth. The company's authorized business of Chinese institutions achieved a revenue of 962 million yuan, a year-on-year increase of 107.10%, with a bright performance. In addition, driven by the dual engine of policy guidance and industry demand, the penetration rate of industry information and innovation continues to increase. In 2021, 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 of credit innovation in the financial industry and has been unanimously recognized by the bank, the two sessions, exchanges, banks, securities companies and other customers. The company implemented the Xinchuang cloud document project on several customer projects represented by large banks, formed the connection with the OA products of Xinchuang platform, brought users end cloud integrated office services in the form of Xinchuang, and demonstrated the basic office service ability of the company's Xinchuang platform to meet the daily office needs of large customers. In the future, with the development of Xinchuang in the industry, the company's institutional authorization business will have broad prospects in the future.
The subscription business of the company has a good momentum of development. In terms of personal office service subscription business, the number of monthly active equipment of the company's main products in 2021 was 544 million, an increase of 14.05% over the same period of last year. Among them, wpsofficepc has 219 million monthly active devices, an increase of 15.87% over the same period last year; The monthly number of active mobile devices was 321 million, an increase of 13.83% over the same period last year; The number of monthly active equipment of other products of the company, such as Kingsoft Ciba, is close to 5 million. The company's cumulative number of annual paid individual users reached 25.37 million, a year-on-year increase of 29.31%. According to the rough estimation of the company's personal subscription business income and the cumulative number of paying users, the company's average single user income (ARPU) of personal subscription business in 2021 was about 57.76 yuan, an increase from about 51.79 yuan in 2020. In the future, driven by the growth of the number of paying users and the improvement of ARPU, the company's personal office service subscription business will continue to grow at a high speed. In terms of Chinese institutional subscription and service business, in 2021, the company continued to improve the penetration of wpsoffice series products at all levels of users through measures such as improving product system, improving service experience and broadening ecological channels, and actively promoted the transformation of Chinese institutional customers from traditional independent end office to cloud and collaborative office. With the gradual deepening of cloud users, the company's institutional subscription and service business revenue has achieved rapid growth.
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 1.409 billion yuan (the previous value was 1.702 billion yuan), 1.881 billion yuan (the previous value was 2.374 billion yuan) and 2.472 billion yuan (New), with EPS of 306 yuan, 4.08 yuan and 5.36 yuan respectively, and the PE corresponding to the closing price on March 24 would be 62.8, 47.1 and 35.8 times respectively. With excellent quality and years of unremitting R & D investment, the company has formed a deep moat, which is unique in domestic basic office software. At present, the company's authorization business is growing rapidly, and the subscription business has a good development momentum. The development of authorization business and subscription business opens up growth space for the company. We are optimistic about the future development of the company and maintain the "recommended" rating of the company.
Risk tips: (1) the process of software legalization is slow. Intellectual property protection and the resulting software legalization is an important driving force for the promotion and Realization of the company's products. If China National Software And Service Company Limited(600536) legalization is promoted slowly, it will affect the growth performance of the company. (2) The willingness to pay increased slowly. At present, China's recognition of software value is still not high. If this situation continues for a long time and the willingness to pay increases slowly, it will affect the payment conversion and profit release of the company's products and services. (3) The increase of ARPU value of members was lower than expected. The members of the company's personal office subscription business are mainly divided into WPS members (including super members) and rice husk members. If the user acceptance of the value-added service products provided by the company to its members is lower than expected, there will be a risk that the ARPU value of the company's subscription business will be lower than expected.
