\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
On April 28, 2022, the company released the first quarterly report of 2022. During the reporting period, the operating revenue was 868 million yuan, a year-on-year increase of 12.26%; The net profit attributable to the parent company was 251 million yuan, a year-on-year decrease of 18.42%.
Personal and institutional subscription businesses have achieved high growth, and contract liabilities have continued to grow, reflecting the development potential. The company's personal office service subscription business revenue in China in 2022q1 was 426 million yuan, a year-on-year increase of 37%; China's institutional subscription and service revenue was 145 million yuan, a year-on-year increase of 79%. The personal subscription business maintained nearly 40% growth, while the institutional subscription business performed well, mainly because the quality of the company's cloud and collaboration products and solutions was continuously improved, and the application experience of government and enterprise users in the field of "cloud and collaboration" was also continuously improved, so as to effectively improve the cloud process and penetration rate of customers.
The overall rapid development of subscription business has driven the improvement of indicators such as the number of users. By the end of the reporting period, the number of monthly active equipment of the company's main products was 572 million, an increase of 14.86% over the same period of last year and 5% over the end of 2021. According to different product lines, the number of monthly active devices of wpsofficepc version was 232 million, an increase of 17.17% over the same period of last year; The monthly number of active mobile devices was 336 million, an increase of 14.29% over the same period last year.
From the perspective of SaaS business development prospect, the continuous high growth of contract liabilities reflects the development potential. The company's contractual liabilities at the end of the reporting period were 1.564 billion yuan, a year-on-year increase of 79%, an increase of 10% over the end of 2021. Contract liabilities are an important indicator of SaaS business potential. The continuous growth shows that the company's subscription business still has high growth potential.
The short-term fluctuation of institutional authorization business does not change the long-term prospect, and the active optimization of advertising business is conducive to improving the user experience. During the reporting period, the authorized business income of the company's Chinese institutions was 232 million yuan, a year-on-year decrease of 11%. Affected by the high base in the same period of last year and the uncertain specific promotion rhythm in the field of information and innovation in the current period, the authorized new business of Chinese institutions slowed down. However, in the medium and long term, the construction of information and innovation in key industries such as finance, operators and energy will be carried out one after another. As a leader in the field of office software, the company is still expected to continue to benefit. At the same time, the company's advertising revenue also fell year-on-year. In order to improve the user experience, the advertising business is under pressure in the short term, but the optimization of user experience is expected to improve the payment conversion rate, which is conducive to the long-term development of the company.
Investment suggestion: the company is a domestic SaaS leader in the field of office software. In the future, it will fully enable the digital transformation of large-scale organizations, which is expected to further improve the company's growth ability. Due to the impact of the promotion rhythm of Xinchuang and other businesses and the high base in the same period last year, some businesses of the company fell year-on-year, but the core SaaS business still maintained rapid growth, the subscription mode extended to institutional customers and achieved success, and the long-term prospect of leading office software is still promising. It is estimated that the net profit attributable to the parent company in 22-24 years is RMB 1.389/1.840/2.415 billion, and the corresponding PE is 53x, 40x and 30x respectively, maintaining the "recommended" rating.
Risk tip: the growth rate of users is lower than expected; The company's b-end business development rhythm is lower than expected; The cultivation of user habits and payment habits may be affected by competitors.
