\u3000\u30 China Baoan Group Co.Ltd(000009) 38 Unisplendour Corporation Limited(000938) )
Event: on the evening of March 25, the company released its annual report for 2021. The annual operating revenue was 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%, and EPS was 0.75 yuan / share. We predict that the net profit attributable to the parent company in 2021 will be 2.136 billion yuan, and the annual performance is in line with expectations.
Comments:
The business quality has improved significantly, and the market share of core products has increased steadily
The core holding subsidiary Xinhua Group III achieved an annual operating revenue of 44.351 billion yuan, a year-on-year increase of 20.52%; The net profit was 3.434 billion yuan, a year-on-year increase of 22.24%. According to IDC data in 2021, the market share of the company’s core products in China has increased steadily, with Ethernet switches accounting for 35.2%, enterprise network routers accounting for 31.3% and x86 servers accounting for 17.4%, all in the forefront.
The growth rate of the Chinese market has increased, and Ziguang cloud and the international market have performed brilliantly
In 2021, the company’s China enterprise network revenue was 36.258 billion yuan, a year-on-year increase of 22.56%; The Chinese operator market was RMB 6.415 billion, with a year-on-year increase of 13.04%. The bid winning share of multi category centralized procurement increased, and there were sufficient orders on hand. The revenue of Ziguang cloud was 1.009 billion yuan, with a year-on-year increase of 67.84%. The one-stop digital solution is becoming more and more perfect. In the same period, we strengthened overseas market expansion, added 4 international subsidiaries (a total of 12), and achieved a revenue of RMB 1.678 billion in international business, including the revenue of H3C brand products and services reached RMB 714 million, a year-on-year increase of 48.81%. The future growth is worth looking forward to.
Continue to increase R & D investment and broaden the moat
The increasing investment in ICT technology and solution R & D has laid a solid foundation for the rapid development of the company’s business and the improvement of market share. In 2021, the R & D investment was 4.881 billion yuan, with a year-on-year increase of 14.15%. The total number of invention patents applied by the company exceeded 10000. The core technologies mastered by the company in key fields such as network, server, storage, cloud computing and security have established a wide technical moat.
Profit forecast and rating
We expect the company’s revenue from 2022 to 2024 to be 81.2/97.2/116.2 billion yuan respectively. Due to the improvement of the profit quality of the company’s ICT business, we will increase the net profit attributable to the parent company from 2.297/2.704 billion yuan to 2.781/3.297 billion yuan in 22-23 years, add 3.93 billion yuan in 2024, and the three-year CAGR is 22.31%, corresponding to the current price earnings ratio of 20x / 17x / 14x respectively. Maintain the “buy” rating.
Risk tips
Systemic risk; The demand of the government, operators, Internet and other large customers does not meet expectations; Overseas business development is less than expected; The upstream supply chain is impacted; The effect of debt restructuring of the parent company did not meet expectations.
