\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
[key points of investment]
The company released its 2021 annual report. In 2021, it achieved a revenue of 3.28 billion yuan, a year-on-year increase of 45.07%. The annual net profit attributable to the parent company was 1.041 billion yuan, with a year-on-year increase of 18.57%, in line with expectations. The non net profit deducted was 840 million yuan, a year-on-year increase of 37.32%; Net operating cash flow was 1.864 billion yuan, a year-on-year increase of 23.10%. 21q4 achieved a revenue of 908 million yuan in a single quarter, a month on month increase of + 12.45% and a year-on-year increase of + 19.79%; In Q4, the net profit attributable to the parent company and the net profit deducted from non net profit in a single quarter were 193 million yuan and 138 million yuan respectively.
The subscription business of personal office services grew steadily, and the proportion of long-term paid users increased. In 2021, China’s personal office service subscription business realized a revenue of 1.465 billion yuan, a year-on-year increase of 44.20%. As of December 31, 2021, the number of monthly live equipment of the company’s main products was 544 million, with a year-on-year increase of 14.05%. Among them, WPS office PC version has 219 million monthly live devices (+ 15.87%), mobile version has 321 million monthly live devices (+ 13.83%), and other products of the company, such as Kingsoft Ciba, have nearly 5 million monthly live devices. By the end of the year, the company had accumulated 25.37 million annual paid individual users, with a year-on-year increase of 29.31%. In the second half of the year, the company strengthened user operation, guided users to use the payment function, promoted the long-term transformation of paying users, and launched functional products for enterprise C-end users. By the end of 2021, the company has accumulated more than 7 million annual super members.
The institutional business grew significantly, and the authorized business benefited from the development of Xinchuang. The b-terminal expanded smoothly. In 2021, the company’s revenue from China’s institutional subscription and service business was 446 million yuan, a year-on-year increase of 23.40%. Within 21 years, Jinshan digital office platform will be released to integrate WPS office, Jinshan document, Jinshan collaboration and other products, improve the richness and overall solution ability of collaborative office products of b-end customers, strengthen the company’s competitiveness in the institutional customer market, and provide a product basis for the next development of institutional business. Benefiting from the development of Xinchuang, the institutional authorization business grew rapidly, and the revenue of China’s institutional authorization business was 962 million yuan, a year-on-year increase of 107.10%.
The contract debt index is excellent, and the equity incentive scheme is issued to bind backbone talents. In the past 21 years, the company incurred R & D expenses of 1.082 billion yuan (+ 52.15%), sales expenses of 695 million yuan (+ 43.94%), and management expenses of 326 million yuan (+ 53.38%). The company’s subscription liability increased by 1.462 billion yuan over the same period last year, representing an increase of 1.462 billion yuan over the same period last year. At the same time, a new phase of equity incentive plan is issued, which plans to grant 1 million restricted shares to 127 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, and the grant price is not less than 45.86 yuan / share. The assessment year for the first granting of restricted shares is three fiscal years from 2022 to 2024. Taking 2021 as the base, the target values of performance assessment are: the growth rate of operating revenue in 2022 is not less than 15.00%; The cumulative growth rate of operating revenue in 2022 and 2023 shall not be less than 147.25%; The cumulative growth rate of operating revenue in 2022, 2023 and 2024 shall not be less than 300.66%, which fully demonstrates the company’s confidence in high performance growth.
[investment suggestions]
The company is the leader of domestic office software. The rapid growth of individual user and institutional user market jointly drives the development of the company, and the promotion of Xinchuang adds new impetus to the development of the company. Affected by the epidemic, the institutional business may face fluctuations. The profit forecast for the company from 2022 to 2023 will be slightly reduced, and the profit forecast for the company in 2024 will be introduced. It is estimated that from 2022 to 2024, the operating revenue of the company will be RMB 4.327/5.948/7.456 billion respectively, the net profit attributable to the parent company will be RMB 1.373/18.66/2.317 billion respectively, the EPS will be RMB 2.98/4.05/5.03 respectively, and the corresponding PE will be 63 / 47 / 37 times respectively, maintaining the “overweight” rating.
[risk tips]
The risk that the authorized business of the institution will be affected due to the fluctuation of the rhythm of Xinchuang;
The user scale expansion is less than the expected risk;
Market competition intensifies risks.
