\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Key investment points
Event: in 2021, the company achieved an operating revenue of 3.28 billion yuan, 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%; Net profit deducted from non parent company was 840 million yuan, with a year-on-year increase of 37.32%.
The personal subscription business continued to grow rapidly, and the membership structure was further optimized. In 2021, the company’s personal subscription business in China achieved a revenue of 1.465 billion yuan, a year-on-year increase of 44.20%. By the end of 2021, the total mad of wpsoffice and Kingsoft Ciba had reached 544 million, with a year-on-year increase of 14.05% and a month on month increase of 4.41%, a new high in nearly seven quarters since the outbreak of the epidemic. Among them, the mad of wpsofficepc version had reached 219 million, with a year-on-year increase of 15.87% and a quarter on quarter increase of 6.31%; Wpssoffice mobile mad reached 321 million, with a year-on-year increase of 13.83% and a quarter on quarter increase of 3.22%; The cumulative number of annual paid individual users reached 25.37 million, with a year-on-year increase of 29.31%, of which the number of super members exceeded 7 million, accounting for more than 27%. The overall payment rate and ARPU should be improved. We believe that the company’s focus on product power to improve member penetration and use stickiness and promote the transformation of paying users from short-term to long-term will be gradually realized, so as to support the healthy and sustainable growth of personal subscription business.
Institutional subscription business grew steadily, and Xinchuang helped increase the volume of authorization business. Under the needs of digitalization and cloud transformation of government and enterprise customers, the company’s China Institutional subscription and service business realized a revenue of 446 million yuan in 2021, with a year-on-year increase of 23.40%. With the continuous enrichment and enabling benefits of the product matrix of the digital office platform, it is expected to become a new driving force for the growth of institutional subscription business. Benefiting from the policy catalysis, the market space of Xinchuang has expanded significantly, the demand of government and enterprise users has increased significantly, the orders of the company’s streaming office software products are rich, and the penetration of Xinchuang products has accelerated, which has driven the company’s Chinese institutional authorization business to continue to maintain rapid growth. In 2021, the revenue was 962 million yuan, a year-on-year increase of 107.10%.
Contract liabilities support the release of performance, and the monthly equity incentive is released to bind core talents. In 2021, the company’s comprehensive gross profit margin was 86.92%, down 0.78 percentage points year-on-year; R & D investment was further increased, R & D personnel increased by nearly 50%, and R & D expenses increased by 52.15% year-on-year to 1.082 billion yuan, accounting for 32.98% of operating revenue; Due to the rapid volume of personal subscription business, contract liabilities increased by 70.62% year-on-year to RMB 1.421 billion, forming a guarantee for the performance in 2022. In addition, the company issued the draft stock incentive plan for 2022, which plans to grant 1 million restricted shares with a grant price of no less than 45.86 yuan / share. The first grant target is 127 core managers and technical backbones. The performance evaluation target is calculated as that the annual compound growth rate of revenue from 2022 to 2024 is no less than 15.33%.
Investment advice: maintain the “buy” rating. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 1.265 billion yuan, 1.941 billion yuan and 2.627 billion yuan respectively, with corresponding EPS of 2.74 yuan, 4.21 yuan and 5.70 yuan respectively, and corresponding PE of 66 times, 43 times and 32 times respectively.
Risk tip: industry competition intensifies: the payment conversion rate is lower than expected: the promotion of Xinchuang slows down
