\u3000\u30 China Baoan Group Co.Ltd(000009) 38 Unisplendour Corporation Limited(000938) )
Event overview: on April 28, 2022, the company released the first quarterly report of 2022, realizing an operating revenue of 15.342 billion yuan, a year-on-year increase of 13.58%, a net profit attributable to the parent company of 372 million yuan, a year-on-year increase of 35.26%, and a net profit deducted from non attributable to the parent company of 363 million yuan, a year-on-year increase of 162.54%, which greatly exceeded the market expectation.
The revenue and profit of Xinhua III both increased, and the gross profit margin improved month on month
The company first disclosed the single quarter performance of its core subsidiary Xinhua 3. In 22q1, Xinhua 3 achieved a revenue of 10.472 billion yuan, a year-on-year increase of 27.78%, and a net profit of 659 million yuan, a year-on-year increase of 33.06%. The single quarter growth rate of Q1 was significantly faster than that of the whole year of 21 (21 year revenue + 20.52% / net profit + 22.24%). We think it mainly reflects the continuous improvement of downstream demand and the further optimization of ICT market competition pattern.
22q1 Ziguang digital signed a contract to become the main distributor of Weidi technology and will carry out the distribution business of Weidi technology rack and rackpdu series products. In the past 21 years, Ziguang digital's Bank and enterprise credit were affected by the group's debt problem, and its performance declined. With the gradual implementation of the group's debt problem, we believe that its 22-year revenue is expected to return to growth.
The company's 22q1 gross profit margin was 21.93%, up 3.58pct year-on-year and 2.95pct month on month. We believe that it is mainly driven by the increase of gross profit margin of Xinhua three, including: 1) the increase of the proportion of revenue of Xinhua three high gross profit margin network products; 2) The effect of price increase of the whole series of products in 21 years is gradually reflected; At the same time, the structural change of Ziguang digital distribution business revenue also made a small contribution.
Increase market expansion and R & D investment, and further optimize the cost structure
On the sales side, in 2022, Xinhua 3 comprehensively optimized China's marketing system, established industrial BG and commercial BG, adopted different market strategies for target customers, explored new marketing models with internet thinking, created a one-stop ICT sales and service online platform for government and enterprise customers - "Xinhua 3 mall", and increased the expansion of overseas markets and personnel investment. On the R & D side, the company increased its strategic investment in "cloud smart native", launched the new enterprise smart native wi-fi7ap products wa7638 and wa7338 respectively on April 7, 22, and released the industry's first 400g Park core switch h3cs10500x-g on April 12. According to IDC data, Xinhua III ranked first in China's 200g / 400g switch market with a share of 48.4%, and continued to lead the Chinese market. On the management side, the company focuses on improving quality and efficiency. The sales / management / R & D expense ratio of 22q1 company was 7.57% / 1.27% / 7.46% respectively, with a year-on-year increase of + 0.15pct / - 0.12pct / + 1.12pct, and the expense structure was further optimized.
Investment suggestion: we are optimistic about the increase of the company's share in the field of government and enterprises + the continuous breakthrough of operators / overseas markets, and look forward to the performance elasticity brought by the improvement of the annual gross profit margin. We expect the net profit attributable to the parent company in 22-24 years to be 2.701 billion / 3.327 billion / 3.971 billion respectively, corresponding to 17 times / 14 times / 11 times of PE, and 38 times of the company's valuation center in recent five years. Maintain a "recommended" rating.
Risk tip: the demand for digital transformation is less than expected, and the expansion of operators and overseas markets is less than expected
