\u3000\u3 Guocheng Mining Co.Ltd(000688) 111 Beijing Kingsoft Office Software Inc(688111) )
Event: on April 29, the company released the report for the first quarter of 2022, realizing an operating revenue of 868 million yuan, a year-on-year increase of 12.26%; The net profit attributable to the listed company was 1.842 billion yuan, which was in line with the expectation of the market.
Revenue increased by 12% year-on-year, and still grew steadily under the high base. 1) In 2021q1, driven by factors such as Xinchuang, the authorized business of the company showed explosive growth, and the year-on-year growth rate of overall revenue reached 107.74%. In 2022q1, the company achieved an operating revenue of 868 million yuan, with a year-on-year increase of 12.26%. It still achieved steady growth under the high base, which verified the overall growth stability. 2) During the reporting period, the company realized the authorized business income of Chinese institutions of 232 million yuan, a slight decrease of 11% over the same period.
Institutional subscriptions have performed well, and the b-end is expected to gradually become the main driving force. 1) During the reporting period, China’s institutional subscription and service business achieved a revenue of 145 million yuan, with a year-on-year increase of 78.72%, which is mainly due to the continuous release of the demand of government and enterprise users for “cloud and collaboration”. With the continuous improvement of the quality of the company’s cloud and collaboration products and solutions, the cloud process and penetration of customers have been effectively improved. 2) In the long run, b-end customers have higher payment rate and ARPU value than C-end customers. The company also continues to cultivate in the institutional end. In December 2021, the company officially released Jinshan digital office platform, aiming at the new generation of office needs in the digital transformation of enterprises. We expect that institutional subscription may gradually become the main driving force for the growth of the company.
Individual subscriptions have been steadily promoted, with healthy growth of monthly life and steady penetration of payment. 1) During the reporting period, China’s personal office service subscription business achieved a revenue of 426 million yuan, a year-on-year increase of 36.72%. 2) In terms of user base, the number of monthly active equipment of the company’s main products was 572 million, with a year-on-year increase of 14.86%; The PC version was 232 million, with a year-on-year increase of 17.17%; The mobile version was 336 million, with a year-on-year increase of 14.29%, and the base of individual users continued to expand. 3) In terms of payment, according to the company’s announcement, the overall user attribute continues to be transformed into a long-term one. We expect the ARPU value to continue to increase, which will promote the continuous growth of China’s personal office service subscription business.
The net growth of personnel is relatively large year-on-year, and the month on month profit level has gradually recovered. 1) During the reporting period, the cash flow received by the company from selling goods and providing labor services was 1.021 billion yuan, a year-on-year increase of 21.76%; The net cash flow from operating activities was 153 million yuan, a year-on-year decrease of 32.76%, mainly due to the net increase of more than 1000 personnel and the increase of employee compensation expenses. At the end of 2021, the number of employees of the company was 4199, an increase of 1375 compared with the same period of last year, mainly because the company continued to promote the cloud and collaboration strategy and continuously invested to improve the overall solution ability for the organization. 2) In terms of cost, the company realized a sales cost of 172 million yuan, a year-on-year increase of 16.97%; The management fee was 97 million yuan, a year-on-year increase of 44.31%; The R & D expenditure was 305 million yuan, with a year-on-year increase of 49.29%, mainly due to the increase of R & D personnel and salary. 3) In terms of profit margin, during the reporting period, the overall gross profit margin of the company was about 86.53%, a year-on-year decrease of 3.21 percentage points and a month on month increase of 3.08 percentage points; The net interest rate attributable to the parent company was about 28.89%, a year-on-year decrease of 10.86 percentage points, a month on month increase of 7.59 percentage points, and the month on month profitability has gradually recovered. As the company’s talent introduction gradually enters a stable period, we expect that the company’s personnel will also enter a relative digestion cycle, and the trend of month on month recovery of profit margin is expected to continue.
Domestic office cloud is the leader, and its long-term growth is continuously verified. 1) Since the transformation of the company from “providing tool products” to “application services”, the revenue of authorized services has been stable, and with the increase of paying customers, the revenue of subscription services has increased rapidly; In December 2020, the company took collaboration as a new core product strategy to further promote cloud office. 2) In the cloud mode, the business and data are on the cloud. The company can expand the scale of users, increase customer stickiness, and continuously derive value-added services through data mining. The company will further enhance the penetration of large-scale cloud and medium-sized collaborative products in December 2021, and is expected to further improve the company’s demand for new ARPU products in one month. With the gradual expansion of Xinchuang and the continuous penetration of 2C and 2b markets, the company is expected to open up long-term growth space.
Maintain the “buy” rating. According to key assumptions and recent announcements to adjust the profit forecast, we expect the company’s revenue to be 4.545 billion yuan, 6.159 billion yuan and 8.020 billion yuan from 2022 to 2024, and the net profit attributable to the parent company to be 1.385 billion yuan, 1.844 billion yuan and 2.515 billion yuan respectively.
Risk tip: the promotion of cloud is not as expected, the risk of intensified industry competition and macro environmental risk
