\u3000\u30003 Midea Group Co.Ltd(000333) 00033)
Key investment points
Event: the company’s q122 revenue was 515 million yuan, a year-on-year increase of – 2.9%, and the net profit attributable to the parent company was 112 million yuan, a year-on-year increase of – 34.0%. Gross profit margin was 84.0%, year-on-year + 0.2pct. Weighted average roe1 71%, year-on-year -1.48pct.
Performance attribution: the growth of main business is under pressure under the fluctuation of [revenue end] market. According to the company’s 2021 annual report, the company’s main businesses accounted for 46.1% of value-added telecommunications, 8.4% of market trading system, 36.6% of advertising and internet promotion, and 8.9% of fund consignment, all of which were highly positively correlated with the activity of capital market. In addition, the number of natural person investors in q122 increased by 5.03 million, a year-on-year increase of – 18.5%. [expenditure side] R & D expenses increased significantly. Q122 R & D expenses were 261 million yuan, a year-on-year increase of + 47.8%, and the R & D expense rate was 50.7%, a year-on-year increase of + 17.4pct, mainly due to the increase in the salary of the company’s R & D personnel. According to the company’s 2021 annual report, R & D is invested in the company’s securities trading system, intelligent financial service platform, intelligent investment adviser, love fund platform upgrade, data intelligent application and artificial intelligence R & D, aiming to improve the company’s technical advantages. The sales rate was 13.9%, year-on-year – 1.4pct, and the management expense rate was 8.2%, year-on-year + 1.7pct, which remained basically stable. The financial expense rate was – 13.1%, year-on-year -4.9pct, mainly due to the increase in bank deposit interest.
The scale of users and the richness of product lines exceed those of the same industry, and the performance reserve is rich: the monthly life of the company’s app is far ahead of that of the same industry. As a company that has been deeply engaged in the field of financial information for 30 years, the richness of product lines accumulated by large-scale R & D investment provides a basis for cash flow. At the end of q122, the company’s contractual liabilities reached 1.148 billion yuan, a year-on-year increase of + 6.9% and a month on month increase of + 10.0%, a record high, providing strong support for future performance growth.
Investment suggestion: the company’s revenue and net profit fluctuate strongly seasonally, often showing a performance peak in the fourth quarter. Q122’s short-term performance is under pressure mainly due to the substantial increase in R & D expenses. We think there is no need to worry too much and maintain the profit forecast unchanged. The current share price of the company corresponds to 2022epe20 84x, an absolute low in recent five years, maintaining the “Buy-A” rating.
Risk tip: the capital market scene has declined, the number of new investors has declined, and the sales of its core products have declined.
