\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 536 China National Software And Service Company Limited(600536) )
Event: the company announced on April 19 that in 2021, the operating revenue was 10.352 billion yuan (+ 39.73%), and the net profit attributable to the parent company was 76 million yuan (+ 10.77%).
Key investment points:
With the rapid growth of revenue, the effect of independent and controllable market strategic layout is becoming more and more obvious. During the reporting period, the company’s main operating revenue was 10.352 billion yuan (+ 39.73%), exceeding the scale of 10 billion yuan for the first time. From the perspective of revenue structure: (1) the revenue of independent software products is 1.574 billion yuan (+ 78.18%), accounting for 15.21% (+ 3.28pcts). During the reporting period, the company carried out special projects for independent products, incubated dozens of independent products through internal self-research, assisted the high-quality and rapid delivery of major engineering projects, provided support for the large-scale promotion of wechat business, and promoted the transformation from project-based delivery to product-based delivery; (2) Industry solutions achieved revenue of 6.435 billion yuan (+ 39.31%), accounting for 62.16% (- 0.19 PCTs). In terms of e-mail business, relying on the implementation experience of large projects and large projects, cooperate with relevant units to tackle key technical problems, accelerate the construction of network security core competence based on PK system, and deepen the transformation from traditional integrators to technology product providers and general contracting service providers. In terms of digital business, we have successfully won the bid for smart power plant construction project in the field of power, with a single project amount of more than 100 million yuan. We have built digital virtual power plants and physical power plants simultaneously, forming a number of core applications and solutions for smart power plants; (3) The revenue of service-oriented business was 2.309 billion yuan (+ 23.38%), accounting for 22.31% (- 2.96pcts). The company comprehensively tracked the development needs of the tax industry and completed the national promotion and implementation of OA system. In addition, we will continue to make efforts in financial institutions, develop a new generation of unified regulatory reporting platform, build a smart regulatory system, and establish new growth points for regulatory business in the next three to five years. We believe that the company has achieved a relatively perfect independent and controllable software layout in operating system, database and other basic software, middleware, security products, application systems and so on. The running in and compatible adaptation of independently innovative software and hardware is expected to drive the high-quality growth of industrial solutions and service-oriented businesses.
Qilin software and Dameng database have performed well. During the reporting period, Kirin software achieved a revenue of 1.134 billion yuan (+ 85.00%) and a net profit attributable to its parent company of 268 million yuan (+ 63.00%), showing a brilliant performance. According to CCID Consulting, Galaxy Qilin has ranked first in domestic operating systems for 10 consecutive years. In 2021, “Galaxy Kirin v10sp1” was officially released, reaching a new height of China’s operating system. Together with thousands of partners, in more than a year, the software and hardware ecological products that have achieved adaptation certification have rapidly exceeded 100000 from more than 10000, covering almost all categories such as desktop office, video and entertainment, industrial control design, network security, collaborative management, industry software and so on. At present, the software and hardware applicable to apple is about one million, and Microsoft is ten million. Kirin hopes to use 2-3 years to reach the ecological level of one million. Wuhan Dameng had a revenue of 743 million yuan (+ 74.91%) and a net profit of 438 million yuan (+ 229.23%). The source code of Dameng database products is 100%, which adheres to independent research and development. In 2020, it ranked first in the market share of domestic databases, covering more than 50 industries such as finance, telecommunications, energy, railway, civil aviation, security, e-government, fire emergency and data center. It has become the first domestic database company to go abroad and achieve breakthroughs in overseas markets, and has been applied in Thailand, Indonesia, Zimbabwe, Peru and other countries. We believe that as a scarce resource of domestic operating system, Kirin software has a revenue of more than 1 billion, and Dameng database products have been gradually polished and shaped, with a rapid increase in profits. Under the trend of self-control, Qilin and Dameng are more certain to achieve sustained and rapid growth.
The cost and expense ratio increased significantly, and the operating cash flow improved significantly. Affected by the increase of software and hardware procurement and labor costs, the operating cost increased significantly by 7.271 billion yuan (+ 42.11%), resulting in a decrease in the gross profit margin (29.56%, – 1.13 PCTs). With the increase of business volume in the current period, 1571 employees (+ 15.22%) were added during the reporting period, resulting in a significant increase in the four expense rate of 31.69% (+ 2.94pcts) during the period. Based on the above factors, the growth rate of net profit is 28.96 PCTs lower than that of revenue. The sales expense was 549 million yuan (+ 88.71%), which was caused by the increase of marketing personnel; The management expense was 848 million yuan (+ 61.73%), which was due to the increase of personnel investment and depreciation and amortization assets; The R & D cost was 1.847 billion yuan (+ 41.17%). The company continued to increase its investment in software products, online information business and gold tax core business. The increase in investment in major business personnel in this period resulted in an increase in labor cost of 493 million yuan over the same period last year; The financial expense was 36 million yuan (+ 486.09%), which was mainly due to the high interest expense of bank borrowings and the high financial lease payment expense recognized by lease liabilities in the current period. Prepayments of 385 million yuan (+ 31.89%), inventories of 2.576 billion yuan (+ 50.68%) and contractual liabilities / advances of 1.15 billion yuan (+ 16.75%) all increased rapidly, indicating that the company has sufficient orders on hand. The net cash flow from operating activities was 790 million yuan (+ 336.99%), which was significantly improved, due to the increase of business volume in the current period and more sales receipts. We believe that the rapid growth of the company’s revenue has led to a significant increase in relevant personnel and expenses. However, in the future, with the promotion of the platform, systematization and service-oriented model, we will focus on the key areas with conditions and foundation and form an industry model that can be replicated and promoted, which is expected to drive the improvement of business efficiency.
The implementation of equity incentive is conducive to the long-term development of the company. The company announced on March 16 that it would grant 2021 restricted shares to incentive objects for the first time. The grant date is March 15. 540 people are granted 13350000 shares in total, with the grant price of 26.14 yuan. The stock source is the company’s A-share common stock issued by the company to the incentive object. The performance assessment objectives for the three years 20222024 are: (1) based on the net profit in 2020, the compound growth rate of net profit shall not be less than 17%, 18% and 19% respectively; (2) The cash return on net assets shall not be lower than 12.5%, 13% and 13.5% respectively, and shall not be lower than the average level of the same industry or the 75th percentile level of the benchmarking enterprise in the current year; (3) △ EVA of each year is positive. This year is the first year of China National Software And Service Company Limited(600536) equity incentive. In the future, it will be implemented as a normalization mechanism every two years, covering more core employees, stimulating the enthusiasm of employees and sharing the dividends of enterprise growth. We believe that the implementation of employee equity incentive in the critical period of the company’s transformation and development will inject vitality and vigor into the development of core business.
It plans to participate in the establishment of China Telecom innovation and investment yijingjie, and continue to increase the layout of information innovation industry. On April 7, the company announced that the company and its subsidiary Kirin software planned to invest a total of 700 million yuan, accounting for 14.14%. Together with 16 enterprises and institutions such as China Greatwall Technology Group Co.Ltd(000066) , SHENSANGDA, the company plans to invest 4.951 billion yuan to establish China Telecom Chuang.
The purpose of this investment is to integrate all forces in the industrial chain, increase Xinchuang, help the company combine endogenous development with external expansion, and improve the layout of the industrial chain. According to the company’s announcement on April 19, the company currently holds 7.64% of the equity of yijingjie. It plans to adopt the way of direct investment + investment through the proposed new holding subsidiary zhongruan financial investment, and make a total contribution of no more than 389 million yuan at the price of 22.91 yuan / 1 yuan of registered capital to subscribe for the newly added registered capital of the participating company yijingjie, up to 169723 million yuan. In September 2020, yijingjie won the bid for Bank Of Guiyang Co.Ltd(601997) core business system yijingjie domestic database application project, with a contract amount of 426 million yuan. As the general integrator and database service provider of the project, Yi Jingjie provides Bank Of Guiyang Co.Ltd(601997) with the construction and maintenance services of its core business system domestic database project, creates domestic core business system solutions, reshapes the industry standard, and has good development prospects in the future. This time, we will promote the business layout of the company in the distributed database and domestic financial core trading system, laying the foundation for promoting the layout of the company’s industrial e-mail business in the later stage. We believe that at present, Xinchuang, a key industry, has begun to speed up, and the company continues to increase its investment in Xinchuang, which is expected to deepen the advantages of the company’s online information industry, accelerate the implementation of Xinchuang projects and improve its performance.
Investment suggestions: 1) the company has a relatively complete independent security software industry chain. It is steadily changing to PKS computing platform system provider, key industry core application provider and national major project general contractor, which is expected to usher in high-quality development; 2) Qilin software and Dameng database products are gradually polished and shaped, and the certainty of continuous and rapid improvement of profits is strong; 3) The company’s increased investment in the information innovation industrial chain will improve the company’s product layout and consolidate the advantages of the information industry. We predict that the operating revenue of China National Software And Service Company Limited(600536) 20222024 will be 12.425 billion yuan, 15.231 billion yuan and 18.836 billion yuan respectively; The net profit attributable to the parent company is 140 million yuan, 237 million yuan and 390 million yuan respectively, and the corresponding EPS is 0.28 yuan, 0.48 yuan and 0.79 yuan respectively. The corresponding PE of the current share price is 125 times, 74 times and 45 times of the current share price, respectively. The “buy” rating is given, and the target price is 45 yuan.
Risk tip: the project progress does not meet expectations, policy risk and business innovation risk.
