\u3000\u30 China Baoan Group Co.Ltd(000009) 38 Unisplendour Corporation Limited(000938) )
Event overview: on March 25, 2022, the company released its annual report for 2021, achieving an operating revenue of 67.638 billion yuan, a year-on-year increase of 12.57%, a net profit attributable to the parent company of 2.148 billion yuan, a year-on-year increase of 18.51%, and a net profit deducted from non attributable to the parent company of 1.654 billion yuan, a year-on-year increase of 11.16%. The performance met our expectations.
The profitability remained stable, and the operation of Xinhua III and Ziguang cloud continued to improve
The company’s revenue growth in 21 years was mainly driven by ICT infrastructure and services. The revenue of this business in 21 years was 41.348 billion yuan, a year-on-year increase of 24.81%, and the revenue of IT product distribution and supply chain services was 30.916 billion yuan, a year-on-year slight increase of 1.07%. On the cost side, the gross profit margin of the company was relatively stable in 21 years, with a slight year-on-year decrease of 0.33pct to 19.52%, of which the gross profit margin of ICT infrastructure and services was 30.88%, with a year-on-year decrease of 3.45pct, mainly due to the increase in the proportion of server products with low gross profit and the upward pressure on the price of upstream raw materials; The gross profit margin of IT product distribution and supply chain services was 7.90%, up 1.24pct year-on-year, mainly due to the optimization of product structure. The three rates remained stable as a whole, and the rates of sales / management / R & D expenses were 6.08% / 1.37% / 6.41% respectively, with a year-on-year increase of + 0.45pct/0.10pct/flat.
The revenue of Xinhua III in 21 years was 44.351 billion yuan, a year-on-year increase of 20.52%, and the net profit was 3.434 billion yuan, a year-on-year increase of 22.24%. Among them, the business revenue of Chinese government and enterprises was 36.258 billion yuan, a year-on-year increase of 22.56%; The company focuses on the layout of digital transformation solutions in 18 industries, enabling the digital transformation and upgrading of industry customers in an all-round way with technology, market and service. The business revenue of Chinese operators was 6.415 billion yuan, a year-on-year increase of 13.04%; The company has become the core supplier of centralized procurement of operators, ranking first in the overall share of the centralized procurement of high-end routers and high-end switches of China Mobile in 21-22 years. With the first share, the company won the bid for two packages of high-end and middle-end firewalls of China Unicom’s firewall centralized procurement project in 21 years. The international business revenue was 1.678 billion yuan, of which the revenue of H3C brand products of Xinhua 3 was 714 million yuan, a year-on-year increase of 48.81%; Since 21 years ago, the company has added five subsidiaries in South Africa, Mexico, Turkey, Singapore and the Philippines. At present, the company has established a total of 12 overseas subsidiaries, certified 830 overseas partners, and its service delivery capacity can cover 135 countries, laying a good foundation for the expansion of overseas business.
Ziguang cloud grew rapidly in cloud services, smart city and industry cloud, with a revenue of 1.009 billion in 21 years, a year-on-year increase of 67.84%. At present, Ziguang cloud has built 43 nodes across the country, covering 22 provinces. It has jointly built Ziguang Unipower industrial Internet platform with Xinhua III, deeply cultivated industrial applications, and focused on PAAS and SaaS capabilities. In 21 years, ziguangyun was still in the early stage of investment, with a net profit of – 90.74 million and a year-on-year loss of 43.55%.
China’s market share remains leading, and the growth rate of some products leads the industry
According to IDC data, the company’s WLAN accounted for the first place (28.4%) for 13 consecutive years in 21 years; Ethernet switch has the second market share (35.2%) for five consecutive years; The market share of routers was the second for four consecutive years, and the sales increased by 33.3% year-on-year; The market share of servers ranked second (17.5%), with a year-on-year increase of 32.8%, nearly three times higher than the market average. Among them, the market share of non-x86 servers ranked first (19.5%), with a year-on-year increase of 92.8%, the market share of blade servers ranked first (47.8%) for three consecutive years, and the market share of X86 servers ranked second (17.4%), with a year-on-year increase of 30.9%.
Investment suggestion: the company has made in-depth layout of the “edge end of core cloud network” industrial chain to benefit from the digital economy. At the same time, operators + overseas markets are expected to further open the growth space. We expect the net profit attributable to the parent company in 22-24 years to be 2.690 billion / 3.256 billion / 3.905 billion respectively, corresponding to 21 times / 17 times / 14 times of PE, and 38 times of the valuation center of the company in recent five years. Maintain the “recommended” rating.
Risk tip: the demand for digital transformation is less than expected, and the expansion of operators and overseas markets is less than expected
