\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event: Beijing Kingsoft Office Software Inc(688111) released the annual report of 2021, and achieved an operating revenue of 3.28 billion yuan in 2021, with a year-on-year increase of 45.07%; The net profit attributable to the parent company was 1.041 billion yuan, a year-on-year increase of 18.57%; The net profit deducted from non parent company was 840 million yuan, with a year-on-year increase of 37.32%, which was in line with our expectations.
The personal subscription business continued to maintain high growth: in 2021, the company continued to strengthen the in-depth cloud service for individual users, resulting in an annual revenue of 1.465 billion yuan for China’s personal subscription business, a year-on-year increase of + 44.2%. Corresponding to the rapid growth of monthly active equipment, the number of paying users increased rapidly. In 2021, the number of monthly active equipment of the company’s main products was 544 million, a year-on-year increase of + 14.05%; Mobile terminal + 1.387 billion, with a year-on-year increase of + 1.387 billion; The cumulative number of paying users reached 25.37 million, a year-on-year increase of + 29.31%. The number of paying users continued to maintain rapid growth, and the cumulative number of annual super members exceeded 7 million. We expect that the company’s personal subscription business will still maintain rapid growth.
The progress of Xinchuang is expected to accelerate the improvement of the company’s penetration at the b-end: in 2021, the authorized business income of Chinese institutions was 962 million yuan, a year-on-year increase of + 107%. The rapid growth of institutional authorization business is mainly due to the significant expansion of market space under the support of policies, the significant increase in the demand of government and enterprise users, and the rich orders of the company’s streaming office software products, which has accelerated the penetration of the company’s information and innovation products. In 2021, China’s institutional subscription and service business revenue was 446 million yuan, a year-on-year increase of + 23%. In the government enterprise market, the company helps various government departments and customers in key industries such as finance, energy and operators to carry out digital transformation. At the same time, the company will also create a perfect e-government application system for relevant provincial government departments, realize the efficient utilization of functions such as e-document preview, writing, typesetting, editing, approval and circulation, and provide high-quality one-stop cloud collaborative office services for the majority of civil servants. At the same time, we believe that the party and government information and innovation market is expected to continue its previous scale in 2022, and the industry information and innovation market will accelerate its volume. We are optimistic about the company’s business development at the B / g end this year.
The high increase in contract liabilities highlights the company’s growth potential: the company’s pre-sale subjects have increased rapidly. The company’s contract liabilities reached 1.421 billion yuan at the end of 2021, a year-on-year increase of + 70.62%, an increase of about 20% compared with the end of 2021q3. The rapid growth of contract liabilities reflects that the stickiness of individual and enterprise users for cloud collaborative office continues to improve, and the cloud process of the whole subscription business is accelerating. In addition, the launch of subsequent cloud documents helps the company improve its product power. The implementation of the company’s institutional subscription business is worth looking forward to.
The draft of equity incentive has clear objectives and is optimistic about the long-term development of the company: the company issued the draft of equity incentive in 2022, involving a total of 127 incentive objects, including core managers and technical backbones. It plans to grant 1 million restricted shares to the incentive objects, accounting for about 0.22% of the total share capital of the company at the time of announcement of the draft incentive plan. The assessment target proposed by the company is based on the performance in 2021. The growth rate of revenue in 2022 is not less than 15%, the growth rate of cumulative value of operating revenue in 20222023 is not less than 147%, and the growth rate of cumulative value of operating revenue in 20222024 is not less than 301%, which shows the company’s confidence in performance growth.
Profit forecast and investment rating: due to the impact of the promotion progress of Xinchuang, we lowered the forecast of the company’s net profit attributable to the parent company from 1.879/2.576 billion yuan to 1.377/1.803 billion yuan from 2022 to 2023, and predicted that the net profit attributable to the parent company in 2024 would be 2.323 billion yuan, and the current market value corresponding to PE would be 63 / 48 / 37 times respectively. We believe that the company, as the leader of China’s office software, has maintained rapid performance growth and “buy” rating this year due to multiple factors such as Xinchuang, online office acceleration and cloud collaboration.
Risk warning: the promotion of Xinchuang is not as expected; The growth of paying users is less than expected; B / g cloud is less than expected
