\u3000\u30 China Baoan Group Co.Ltd(000009) 38 Unisplendour Corporation Limited(000938) )
1. Event: in 2021, the company achieved an operating revenue of 67.638 billion yuan, a year-on-year increase of 12.57%; The net profit attributable to the parent company was 2.148 billion yuan, a year-on-year increase of 18.51%; The net profit deducted from non parent company was 1.654 billion yuan, a year-on-year decrease of 11.16%.
2. The income structure continued to improve and the profit gradually stabilized
By product, the income structure continued to improve. ICT infrastructure and service business realized a revenue of 41.348 billion yuan, a year-on-year increase of 24.81%, accounting for 61.13% of operating revenue and a gross profit margin of 25.67%, a decrease of 3.45 PCT over the same period last year; It product distribution and supply chain service business reached 30.916 billion yuan, a year-on-year increase of 1.07%, accounting for 45.71% of operating revenue and 7.90% of gross profit margin, an increase of 1.24 PCT over the same period last year. The net profit attributable to the parent company was 2.148 billion yuan, a year-on-year increase of 18.51%; The net profit deducted from non parent company was 1.654 billion yuan, a year-on-year decrease of 11.16%.
3. The business of the two high-quality subsidiaries continued to rise, and the market share of a number of ICT products continued to lead
Xinhua III continued to focus on the three sectors of Chinese government and enterprises, operators and international business, with rapid business growth. Xinhua III, the holding subsidiary of the company, achieved a revenue of 44.351 billion yuan in 2021, a year-on-year increase of 20.52%, and a net profit of 3.434 billion yuan, a year-on-year increase of 22.24%. Among them, China’s government and enterprise business achieved a revenue of 36.258 billion yuan, an increase of 22.56% year-on-year. It focused on 18 industries and accelerated the implementation of projects in many fields such as new smart city, smart transportation, smart medical treatment, smart education, smart energy, smart water conservancy, industrial Internet and smart Park, realizing rapid business growth;
The business of Chinese operators achieved a revenue of 6.415 billion yuan, a year-on-year increase of 13.04%. The annual delivery amount increased rapidly and the market share increased continuously. In 2021, it ranked first in the overall share of China Mobile’s centralized purchase of high-end routers and high-end switches from 2021 to 2022, and achieved the first breakthrough of vbras router equipment in China Mobile’s centralized purchase project; Obtain 20% share in the centralized purchase of new distributed block storage of China Mobile from 2021 to 2022, and realize the first breakthrough in the bidding project of China mobile block storage type; Successively won the bid for China mobile network cloud resource pool, PC server centralized purchase, hardware firewall centralized purchase and other projects. Win the bid with the first share of 6 Lvjing Holding Co.Ltd(000502) 021 firewall centralized purchase project, including two bid packages: high-end firewall and middle-end firewall. Winning the bid of China Telecom Corporation Limited(601728) 2021 STN equipment construction project centralized purchase project, China Telecom Corporation Limited(601728) core route switching equipment centralized purchase project and other key projects;
The international business achieved a revenue of 1.678 billion yuan, of which the revenue of Xinhua 3 H3C brand (mainly switches, routers, wireless and other network products) reached 714 million yuan, a year-on-year increase of 48.81%, realizing a high-speed growth. Xinhua III established four subsidiaries in South Africa, Mexico, Turkey and Singapore in 2021, and completed the establishment of Filipino subsidiaries in early 2022, with 12 overseas subsidiaries. After three years of international market development, Xinhua III’s brand influence in the international market is expanding day by day, and has built a relatively strong technical support, project deployment and supply chain capacity all over the world. By the end of 2021, Xinhua III had 830 certified overseas partners, established spare parts centers in 24 countries and regions, and the service delivery can cover 135 countries.
Ziguang cloud actively expanded the industry cloud, with a revenue scale of more than one billion yuan. In 2021, the revenue was 1.009 billion yuan, with a year-on-year increase of 67.84%, the net profit attributable to the owner of the parent company was -90.741 million yuan, and the loss decreased by 43.55% year-on-year. In 2021, the company acquired 46.67% controlling stake of Ziguang cloud and became a wholly-owned subsidiary of the group. At the same time, the company newly built Ziguang cloud 3.0 to achieve unified architecture, brand and service, provide global coverage and multi cloud management capabilities of public cloud, private cloud, hybrid cloud and edge cloud, and apply AI to cloud infrastructure, cloud native architecture, data console and other fields to build a full stack of smart cloud for smart city, government affairs, transportation Digital services are provided in the whole scene of education, medical treatment, manufacturing and other industries.
The market share of many products of the company continued to lead, and the market share of X86 server increased rapidly. In 2021, the market share of enterprise WLAN in China was 28.4%, ranking first in the market for 13 consecutive years; In China, the market share of Ethernet switch and enterprise network router is 35.2% and 31.3% respectively, ranking the second in the market; In China, the market share of X86 server increased from 15.4% in the previous year to 17.4%, ranking second in the market; In China, the market share of non-x86 server is 19.5%, jumping from the fourth in the previous year to the first; China’s blade server market share is 47.8%, and continues to rank first in the market; The storage market share in China is 12.6%, ranking second in the market; The market share of security hardware in China is 9.0%, ranking second in the market; In the first three quarters of 2021, the market share of super integration in China was 20.5%, and the market share rose to the first. (the above data is from IDC)
4. The expense side will remain stable and increase strategic goods preparation. It is expected that with the business development, the net operating cash flow is expected to return to positive quickly
The cost side continued to control and the rate remained basically stable. The overall expense rate was 13.43%, with a year-on-year increase of 0.50PCT, mainly due to the year-on-year increase of 0.45pct in the sales expense rate. Among them, the rate of sales, management, R & D and financial expenses was 6.08% / 1.37% / – 0.43% / 6.41%, with a year-on-year change of + 0.45/0.10 / – 0.05/0.00pct.
Cash flow and asset side, enterprise business structure transformation, superposition of a large number of strategic goods preparation, and short-term negative operating net cash flow. It is expected to return to positive rapidly with business development. The net cash flow of Xinhua’s procurement business increased by 18.41 billion yuan in 2020, which was mainly due to the increase of net cash flow of Xinhua’s procurement business and geopolitical transfer, with a year-on-year increase of 2.41 billion yuan in 2021. Considering that the cash ratio of goods sold by the company was 1.16 in 2021 (1.12 IN 2020), showing a trend of stabilization and recovery, and the overall business is still in the stage of rapid development.
5. Build the core competence of “cloud intelligence native” and continue to promote the strategy of “core cloud network edge”
In 2021, the company will continue to lay out the “core cloud network edge end” industrial chain, grasp the opportunities of urban and industrial development and reconstruction, rely on years of ICT technology accumulation and digital experience, and based on the “homogeneous hybrid cloud” cloud platform, continue to strengthen the core ability of “cloud intelligence native”, the top-level design ability of digital transformation and the resource ability of fully integrating ecological partners, from intelligent connection, intelligent computing, intelligent storage In the six fields of cloud computing and cloud service business, active security and intelligent terminal, we have continuously launched smart project solutions and intelligent network products such as smart city, smart medical treatment, smart transportation and smart education, enabling the digital transformation of industry customers.
6. Investment suggestions
Considering the company’s future operator business and overseas market channel development, the profit forecast is slightly adjusted. It is estimated that from 2022 to 2024, the revenue will be adjusted from 75.39/86.76/n/a billion yuan to 76.32/87.38/101.22 billion yuan, and the earnings per share will be adjusted from 0.92/1.16/n/a yuan to 0.93/1.16/1.44 yuan respectively, corresponding to 19.46 yuan / share on March 25, 2022, and the closing price PE will be 21.0/16.7/13.5 times respectively, maintaining the “buy” rating.
7. Risk warning: risk of macroeconomic environment change; The epidemic affects the upstream supply of the industrial chain: the uncertainty of covid-19 epidemic leads to the failure of upstream chip manufacturers to meet the expansion of production capacity and realize the risk of user delivery; Technical product R & D and market competition risk; Exchange rate fluctuation risk; Systemic risk.
