\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 845 Shanghai Baosight Software Co.Ltd(600845) )
Event: on March 28, 2022, the company released its 2021 annual report, realizing an operating revenue of 11.759 billion yuan, a year-on-year increase of 15.01% (after adjustment); The net profit attributable to shareholders of listed companies was 1.819 billion yuan, with a year-on-year increase of 35.92%, which was in line with the scope of early express. On the same day, the company issued the announcement of daily connected transactions in 2022. It is estimated that the total amount of connected transactions in 2022 will be 10.022 billion yuan, including 9.1 billion yuan of operating revenue.
Baowu digital intelligence transformation continued to advance, and the business gross profit margin continued to increase. 1) Considering the acquisition of Pegasus Zhike in August 2021, the company restated and adjusted the comparative consolidated statements in the previous period. In terms of revenue, the company achieved an operating revenue of RMB 11.759 billion in 2021, with a year-on-year increase of 15.01% (after adjustment) and 23.6% (before adjustment); Q4 achieved an operating revenue of 4.354 billion yuan in a single quarter, with a year-on-year increase of about 2.8% (after adjustment), in line with market expectations. 2) In terms of business, during the reporting period, the company achieved software development and engineering service revenue of RMB 8.502 billion, with a year-on-year increase of 19.10%. We expect that it is mainly due to the promotion of integration of Baowu group in 2021, the growth of demand for smart manufacturing and smart operation, and the increase of the scale of the company’s automation, informatization and other business revenue. Meanwhile, the gross profit margin of the business also reached 27.60%, an increase of 3.88 percentage points over the same period last year. We expect that the main reasons are as follows: first, in terms of revenue structure, the intelligent business with relatively low gross profit has a high base in 2020 and a relatively slow growth in 2021, while the automation and information business with high gross profit continues to grow rapidly and the proportion of revenue continues to increase; Second, the company’s industrial Internet platform, PLC and other products have made great progress in 2021. The industrial Internet platform is expected to reduce software development costs and improve personnel development efficiency. PLC has a high degree of standardization and high technical content. With the gradual expansion of relevant products and the emergence of scale effect, we expect the gross profit margin and net profit margin of the company to continue to improve. 3) In terms of service outsourcing business, the company achieved an operating revenue of RMB 3.121 billion during the reporting period, with a year-on-year increase of 8.87%. Under the guidance of the national “new infrastructure” policy, the company continued to promote the national layout of baozhiyun business with strategic customers; Meanwhile, the gross profit margin of the business also reached 46.72% in 2021, an increase of 3.68 percentage points over the same period last year. According to the previous announcement, as of 2019, the listing rate of the delivered projects of baozhiyun has exceeded 80%, and the listing rate continues to rise in 2020 and 2021. We expect that the overall listing rate of baozhiyun in the first four phases may have reached 90%. According to the announcement of major contracts, the signing period of IDC of the company is basically ten years. We expect that IDC business will provide a stable source of cash flow and profit for the company in the medium and short term; In the long run, benefiting from the new infrastructure needs of it, the company is expected to become the industry leader and winner.
The revenue from related party transactions is expected to reach 9.1 billion yuan in 2022, and the prosperity of steel it business continues to be verified. 1) According to the announcement of daily connected transactions in 2022, the company expects to realize a total of 10.022 billion yuan of connected transactions with China Baowu iron and Steel Group Co., Ltd. and its subsidiaries in 2022, with a year-on-year actual amount of 7.169 billion yuan in 2021, with a growth rate of about 39.80%; Among them, the operating revenue was about 9.100 billion yuan, with a year-on-year growth rate of about 38.61%, which verified the prosperity of the company’s steel it business. 2) According to the company’s previous announcement, the total amount of related party transactions realized by the company in 2019 is about 3.7 billion yuan. Taking the estimated value in 2022 as a reference, the compound growth rate of related party transactions between the company and Baowu and its subsidiaries from 2019 to 2022 is about 39.91%, reflecting the large amount of it demand brought by Baowu’s continuous merger and reorganization and digital transformation.
The overall cost rate remained stable, and R & D investment continued to strengthen. 1) During the reporting period, the company realized a sales expense of 206 million yuan, a year-on-year increase of 21.57%; The sales expense rate was 1.75%, a decrease of 0.01 percentage points over the same period last year. The management fee was 3.63 billion yuan, a year-on-year increase of 3.63%; The management expense ratio was 2.81%, an increase of 0.62 percentage points over the same period last year. The changes in sales expenses and management expenses are mainly due to the increase in employee salary and equity incentive expenses this year, on the other hand, the low sales and management expenses in the same period last year due to the special subsidies of Baowu group and the national social security reduction and exemption policies last year. 2) The R & D cost was 1.290 billion yuan, a year-on-year increase of 29.60%; The R & D expense rate was 10.97%, an increase of 1 percentage point over the same period of last year, mainly due to the company’s addition of R & D investment in Shanghai Dzh Limited(601519) manufacturing, industrial Internet and big data. In 2021, the total number of employees of the company reached 5258, an increase of 1052 compared with 2020; Among them, 42 sales personnel and 1003 technical personnel are increased, which is expected to better meet the full demand of steel orders.
The core target has long-term growth ability, and the valuation level highlights the cost performance. 1) In terms of resource endowment, the company has undertaken the customer scenarios and core resources of Baowu group. In terms of endogenous capacity, the company’s software and service capacity have been continuously improved, helping Baosteel and other central enterprises to become China’s first-class information level. In terms of extension and expansion, the company continued to cultivate vertically and completed the in-depth iteration from MES and ERP to industrial Internet and PLC products, facing China’s industrial control market space of nearly 200 billion a year; It has also expanded many customer scenarios outside Baowu system and across industries. Generally speaking, we believe that the company has long-term and sustainable growth ability. 2) According to wind data, as of March 28, the current market value of the company corresponds to about 30 times of PE in 2022, and the valuation has reached a historical low of nearly three years.
Maintain the “buy” rating. Adjust the profit forecast according to key assumptions and recent announcements. It is estimated that the company will realize revenue of RMB 15.052 billion, RMB 18.912 billion and RMB 23.224 billion from 2022 to 2024; The net profit attributable to the parent company was 2.418 billion yuan, 3.202 billion yuan and 4.132 billion yuan.
Risk tip: there is a risk of slowdown in IDC demand, the domestic substitution process of industrial software is not as expected, the information demand of downstream industries such as steel is at a risk of decline, and it is greatly affected by the operation status of Baowu group
