\u3000\u30 China Baoan Group Co.Ltd(000009) 38 Unisplendour Corporation Limited(000938) )
Event: on April 28, 2022, the company released the first quarter report of 2022. In 2022q1, the operating revenue reached 15.342 billion yuan, a year-on-year increase of 13.58%; The net profit attributable to the parent company was 372 million yuan, a year-on-year increase of 35.26%; The net profit deducted from non parent company was 363 million yuan, with a year-on-year increase of 162.54%. Xinhua Group Co., Ltd., the holding subsidiary of the company, realized an operating revenue of 10.472 billion yuan, a year-on-year increase of 27.78%; The net profit attributable to the parent company was 659 million yuan, a year-on-year increase of 33.06%.
Revenue and net profit achieved rapid growth, and gross profit margin increased steadily. In the first quarter, the company overcame the adverse impact of the epidemic and actively promoted contract delivery. In 2022q1, the company achieved a revenue of 15.342 billion yuan, a year-on-year increase of 13.58%. The revenue of ICT infrastructure products increased rapidly, digital solutions continued to be applied, the business growth in the field of cloud and intelligence was good, and the good progress of various businesses promoted the stable growth of the company’s revenue. In 2022q1, the net profit deducted from non parent company was 363 million yuan, with a year-on-year increase of 162.54%. The rapid growth of net profit was mainly due to the steady growth of revenue driven by the increase of the company’s product share and the year-on-year improvement of the company’s gross profit margin. The gross profit margin in 2022q1 was 21.93%, an increase of 3.58pct year-on-year; The net interest rate was 4.24%, with a year-on-year increase of 0.70pct. The profitability of the company continued to improve, mainly due to the continuous optimization of the company’s product structure and the loose competitive environment in the industry. As a leading enterprise in the ICT field, the company has the advantage of product pricing. We believe that in the future, as the company continues to increase R & D efforts, improve the technical content of products and services, and strengthen fine management and cost control, there is room for further improvement of the company’s gross profit margin and net profit margin.
Excellent cost control, good control of three rates, and increased R & D cost rate. The sales expense rate in 2022q1 was 7.57%, up 0.15pct year-on-year, mainly due to the company’s increased sales expansion, which increased the relevant marketing costs; The management expense ratio was 1.27%, a year-on-year decrease of 0.12pct, mainly due to the improvement of the internal management efficiency of the company; The financial expense ratio was – 0.29%, with a year-on-year increase of 0.52pct, mainly due to the increase of interest expenses of the subsidiary Xinhua third group Co., Ltd. Taking technological innovation as the core engine, the company has continuously increased its R & D investment in cloud computing, big data, information security, Internet of things, storage, 5g and industrial applications. In 2022q1, the R & D investment reached 1.145 billion yuan, with a year-on-year increase of 33.63%, and the R & D cost rate reached 7.46%, with a year-on-year increase of 1.12pct. The leading core technology and outstanding innovation ability will continue to improve the company’s core competitiveness and lay a solid foundation for the company’s high-quality development.
Build the core competence of “cloud intelligence native” and deeply layout the industrial chain of “core cloud network edge end”. In the first quarter of 2022, the company increased the strategic investment in “cloud smart native” technology, continued to upgrade and improve products and solutions, and strengthened the deep integration of digital technology and industrial application scenarios. At the same time, relying on years of ICT technology accumulation and digital experience, the company continues to deeply layout the “core cloud network edge end” industrial chain, has the ability of vertical integration of the whole industrial chain and vertical technology from general-purpose products to industry-specific products, from core chips to system machines, to data platforms, to cloud applications, and provides an original digital base of cloud intelligence integrating computing, storage, network and security. We believe that in 2022, under the guidance of the “cloud intelligence native” strategy and superimposed with the dividends of digital transformation and upgrading, the company will gradually grow into a “digital solution leader” and can grow in the future.
Investment suggestion: the company is a leading enterprise in the field of ICT. It has leading digital technology and a full range of key software and hardware products required for the construction of a new generation of information infrastructure. It has an in-depth layout of the “core cloud network edge end” industrial chain, with all fundamentals facing the good. We expect that the company’s revenue from 2022 to 2024 will be 75.7/90.1/103 billion yuan respectively, and the net profit will be 26 / 32 / 36 billion yuan respectively, corresponding to eps0.5 billion yuan RMB 13.90/1, outstanding growth. Maintain the target price of 24.57 yuan and maintain the investment rating of buy-a.
Risk tips: macroeconomic environment change risk, technology and product R & D risk, operation risk and human resource risk
