\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Key investment points
Event: the company released its annual report for 2021, realizing a revenue of 3.28 billion yuan, an increase of 45.1% over the previous year; The net profit attributable to the parent company was 1.04 billion yuan, an increase of 18.6% over the previous year; The net profit after non deduction was 840 million yuan, a year-on-year increase of 37.3%. The company's cloud transformation process is smooth, and the overall performance is expected to compound.
The focus of business has been steadily adjusted, and subscription business accounts for more than half. The company's subscription business (individual + institution) has achieved a total revenue of 1.91 billion yuan, accounting for 58.3%, and the transformation has achieved remarkable results. Specifically, 1) personal subscription: the revenue was 1.47 billion yuan, a year-on-year increase of 44.2%. The company continues to optimize the functional experience, and both monthly living users and paying users have improved. As of December 31, 2021, the company's main product Mau reached 540 million, with a year-on-year increase of 14.1%; The cumulative annual paid individual users reached 25.37 million, with a year-on-year increase of 29.3%, of which the annual number of super members exceeded 7 million. The effect of the company's adjustment of paid entrance is obvious. 2) Institutional subscription: the revenue was 450 million yuan, a year-on-year increase of 23.4%. The company actively promoted the transformation of institutional customers from traditional independent end office to cloud and collaborative office. The number of registered enterprises in the public cloud service market has exceeded one million, and released the organization level digital solution "Jinshan digital office platform" at the end of 2021. The subscription payment of follow-up institutions is expected to accelerate. In addition, the company's contractual liabilities at the end of 2021 reached 1.42 billion yuan, an increase of 70.6% year-on-year, which once again accelerated the pace of cloud transformation of Yingzheng company, laying a solid foundation for the release of subsequent performance.
The development of information and innovation industry was deepened and the authorized business doubled. The company's institutional authorization business achieved a revenue of 960 million yuan, a year-on-year increase of 107.1%. During the reporting period, China's information and innovation industry entered the development period, and the company's products have been adapted to various domestic CPUs, operating systems and other systems. Not only do government and enterprise customers have rich orders, but also connect with the digital transformation needs of information and innovation customers in China Southern Power Grid, China Mobile, Bank Of Communications Co.Ltd(601328) , China Merchants Bank Co.Ltd(600036) and other industries. With the continuous expansion and deepening of the information and innovation industry in the future, the company's product penetration is expected to be further improved. In addition, the company's Internet advertising promotion services and other businesses achieved a revenue of 410 million, a year-on-year decrease of 3.0%. The company continues to make strategic adjustments, actively reduce the number of advertising bits and push frequency, and gradually realize the transformation from quantity to quality.
A new round of equity incentive was released, and the pace of strategic transformation was better. The company issued the draft of equity incentive in 2022 and plans to grant 1 million restricted shares to 127 core managers and technical backbones, accounting for about 0.22% of the total share capital of the company. The assessment target of Grade A is based on the performance of 2021. The compound growth rate of operating revenue from 2022 to 2024 is not less than 15%, and the trigger value of grade B assessment is that the compound growth rate of operating revenue from 2022 to 2024 is not less than 10%. The release of a new round of equity incentive scheme is expected to mobilize the enthusiasm of core employees, and the company's future strategic transformation progress is worth looking forward to.
Profit forecast and investment suggestions. It is estimated that from 2022 to 2024, the compound growth rate of the company's net profit attributable to the parent company will reach 32.2%. As the only leader of domestic office software, the company occupies a good track and will continue to benefit from dividends such as the promotion of information innovation and the trend of cloud Office; At the same time, the company has built a richer cloud and collaborative office product matrix for the digital transformation needs of the b-end industry. The digital office platform released in 2021 has good deployment potential, the institutional subscription business is expected to grow rapidly, and the subscription payment conversion rate of the C-end also has potential to be tapped. The subsequent growth is worth looking forward to and maintains the "buy" rating.
Risk tip: the increase of payment conversion rate is less than expected; Subscriber growth was less than expected; The substitution rate of localization is lower than expected; Intensified industry competition, etc.
