\u3000\u3 China Vanke Co.Ltd(000002) 230 Iflytek Co.Ltd(002230) )
Event overview
Recently, the company released its 2021 annual report and the first quarterly report of 2022. In 2021, the operating revenue reached 18.314 billion yuan, a year-on-year increase of 40.61%. The net profit attributable to the parent company was 1.556 billion yuan, a year-on-year increase of 14.13%, and the net profit deducted from non attributable to the parent company was 979 million yuan, a year-on-year increase of 27.54%. The net profit attributable to the parent company was RMB 202771 billion, a year-on-year increase of RMB 202371 billion, with a net profit attributable to the parent company of RMB 202371 billion, a year-on-year decrease of 2.05 billion. The growth rate of the company’s revenue side was higher than expected, and the net profit fluctuated due to the changes in the market value of Cambricon Technologies Corporation Limited(688256) , Three’S Company Media Group Co.Ltd(605168) and Shangtang technology listed, which still achieved good growth after deduction.
The business in the base area developed well and AI dividends continued to be released
The company achieved a revenue growth rate of 40.61% in 2021, exceeding the target of equity incentive and the previous expectations of the market. We believe that the company’s development strategy of “base business” + “systematic innovation” has achieved good results. The company’s “strategic base” focuses on the livelihood rigid demand scenario of AI scale business, and constructs the sustainable development advantage of “rigid demand + generation difference” based on the standard of “benign dependence of users, long-term operation ability, sustainable growth potential and industry demonstration value”. According to the disclosure in the annual report and investor relations activity table, in 2021, the company’s base business accounted for more than 50% of the total revenue, with a growth rate of 47%, exceeding the overall growth rate of the company, laying a good foundation for the rapid development of the company. Specific points of view:
1) smart education track: in 2021, the company’s education products and services achieved a revenue of 6.007 billion yuan, a year-on-year increase of 49.47%. In terms of products, according to the disclosure of the annual report, the individualized teaching solution will continue to be implemented in nearly 20 cities, districts (counties) such as Jinshui District of Zhengzhou, Wuhan Economic Development Zone, West Coast new area of Qingdao, Dadong District of Shenyang, Changchun City of Jilin, Yijiang District of Wuhu City in 2021; In terms of smart classroom products, layered homework has served more than 8000 schools in 2021, with about 120000 teachers and nearly 4 million students. Layered homework has been assigned more than 60000 times. In addition, the “double reduction” policy has brought about an incremental market for after-school services. According to the annual report, iFLYTEK’s after-school service solution has covered more than 170 districts and counties and more than 4000 schools in 2021; In terms of C-end products, according to the annual report, in 2021, the number of schools operating personalized learning manuals increased by 50%, the scale of users increased by 40%, and the renewal rate increased from 75% to 90%. In 2021, the sales volume of AI learning machine increased by 150%, and the sales volume of JD tmall Gmv and increased by 200%. The NPs value recommended by users ranked first in the industry with a score of nearly 40%; In terms of English listening and speaking products, in 2021, 4 provincial and municipal college entrance examinations and 29 Prefecture and municipal high school entrance examinations were added, covering 14 provincial and municipal college entrance examinations and 87 Prefecture and municipal high school entrance examinations. We believe that with the continuous implementation of the “double reduction” policy and the gradual performance of the benchmarking case of the company’s individualized teaching solution, and the continuous expansion of C-end business, the education track is still expected to maintain rapid growth.
2) smart medical track: according to the disclosure of the annual report, the company’s medical track achieved a revenue of 338 million yuan in 2021, with a year-on-year increase of 8.06%. The main development strategy of the company’s medical track in 2021 is to promote the intelligent medical assistant products that have been covered in Anhui Province to the whole country. According to the disclosure of the annual report, general practitioner assistants have covered 28 provinces (autonomous regions and municipalities directly under the central government) and 284 districts and counties in 2021. Therefore, we believe that although the growth rate of the company’s medical income in 2021 is slow, on the one hand, the epidemic has reduced the investment of the hospital and the government in informatization, on the other hand, the company’s strategy of seizing the national market has not reproduced the development model promoted in Anhui Province, which has affected the realization of income. With the completion of the national layout of the company’s medical business, we still maintain confidence in the rapid growth of the medical track after 2022.
3) open platform and consumer business: in 2021, the company’s open platform and consumer business realized a total revenue of 4.687 billion yuan, a year-on-year increase of 52.19%, including 2.988 billion yuan of open platform, a year-on-year increase of 55.55%, and 1.237 billion yuan of intelligent hardware products, a year-on-year increase of 41.63%. According to the disclosure of the annual report, in 2021, iFLYTEK open platform has opened 449 AI capabilities and schemes to the outside world, bringing together 2.93 million developers, and focusing on enabling 18 industries such as finance, agriculture and energy. Relying on the business model of AI marketing and algorithm authorization, the open platform is expected to continue to maintain rapid growth. In terms of intelligent hardware, the company continued to expand around the AI + office scene. According to the disclosure in the annual report, in 2021, the sales volume of the company’s consumer hardware increased by 140% year-on-year, Gmv increased by 152%, and the growth rate of JD tmall dual platform Gmv exceeded 80%. We believe that consumer products still have broad development space in the future.
4) smart car track: in 2021, the company achieved a revenue of 449 million yuan, a year-on-year increase of 38.92%. According to the disclosure of the annual report, the company has delivered more than 1200 models and carried more than 39 million sets of front mounted vehicles. In 2021, the smart car business achieved 7 million sets of front loading, more than 200 new delivery models, reached more than 40 cooperative car enterprises, and the fixed-point reserve increased by 90%; There are more than 10 million active users every month and nearly 2 billion voice interactions every year. We believe that with the intelligent process of the car, iFLYTEK is expected to continue to expand in the car track.
GBC’s coordinated development opens up space for future growth
From the perspective of development strategy, the company’s base business relies on its own excellent products, benchmark customers verified by statistical data and use results to enter the g-end market, expand from g-end to b-end and C-end, and finally form the development pattern and business closed loop of GBC linkage, so as to open up space for the company’s value creation. This development idea of GBC collaboration and linkage has gradually achieved results. Let’s analyze several typical base businesses of the company:
Closed loop learning and personalized learning: GBC. Under the background of the “double reduction” policy, with the combination of its own AI technology and educational scene, the company provides comprehensive solutions for individualized teaching and relevant products inside and outside the classroom for students’ personalized learning. First, the regional individualized teaching solution project is implemented at the g-end. According to the company’s annual report and announcement, the company has previously won hundreds of millions of regional orders in Bengbu, Anhui and the west coast of Qingdao, prompting the rapid landing of the company’s business at the g-end. In this process, the company continues to introduce a variety of b-end single school application products such as smart classroom, school teaching cloud platform, learning situation analysis and marking system and after-school comprehensive solutions to b-end schools, so as to realize the extension from g-end to b-end. By virtue of the company’s products launched at the g-end and b-end and a large number of scene knowledge maps accumulated, the company introduces personalized learning manuals and AI learning machine products outside the school to the students’ parents at the C-end, so as to get rid of the project-based business model at the g-end and b-end, develop towards the sustainable charging at the C-end and open up a larger market space.
At present, this GBC linkage development strategy has been successful in teaching students according to their aptitude and personalized learning in the education track, which has promoted the rapid growth of education business.
2) English listening and speaking products: the next example of GBC linkage. In addition to the solution of teaching students according to their aptitude, with the oral English test being included in the scope of the college entrance examination in more and more provinces, the company is expected to continue to realize the joint development of GBC in English listening and speaking products. According to the annual report, the company has accumulated an oral English examination system covering the college entrance examination in 14 provinces and cities and the secondary school entrance examination in 87 prefectures and cities. With the completion of the g-end examination environment, the b-end school will inevitably need to build a system environment for daily training and simulated examination. Therefore, the company is expected to move forward from the g-end to the b-end oral English system. In addition, in the normal learning process, students also need to learn English independently in their families outside the school. IFLYTEK is expected to build a C-end charging listening and speaking training system based on the English listening and speaking scene to realize the linkage of GBC in the English listening and speaking scene.
3) smart healthcare: potential GBC linked blue ocean market. In the field of smart medicine, the company mainly focuses on g-end and b-end products. In terms of g-end, in cooperation with the local health commission, based on the company’s intelligent medical assistant products, it provides functions such as infectious disease prevention and control, family doctor follow-up, community management and so on. According to the disclosure of the annual report, the company assisted governments and medical institutions at all levels to carry out epidemic prevention and control and basic public health follow-up services, with a total of more than 600 million people, which greatly improved the efficiency of epidemic prevention and control and public health follow-up of grass-roots medical personnel. In the grass-roots hospital at end B, the auxiliary diagnosis of common diseases is realized through intelligent medical assistant. According to the disclosure of the annual report, the company has served more than 50000 grass-roots doctors and 100 million residents, assisted grass-roots doctors to complete more than 130 million standardized electronic medical records and provided 340 million times of AI auxiliary diagnosis suggestions. In terms of C-terminal, the company is actively exploring the application of chronic disease management. According to the annual report, the chronic disease management business system built by the company in Jieshou City, Anhui Province has a total of more than 1.8 million AI interventions, more than five times the doctor management efficiency, the hypertension control rate has increased from 39.2% to 72.45%, and the hospitalization rate of cardiovascular and cerebrovascular diseases has decreased from 18.2% to 14.48%. We believe that smart medical is an emerging blue ocean market, in which the company is expected to achieve incremental business development with the development strategy of GBC linkage.
Investment advice
The growth rate of the company’s annual report and the first quarterly report is higher than expected. At present, the company is in the stage of artificial intelligence strategy 2.0, and gradually forms a closed loop of “data algorithm product”. It is expected to get rid of the project-based and customized business model and realize the large-scale commercial application of artificial intelligence technology by relying on the development strategy of GBC linkage. We expect the company to achieve an operating revenue of 26.16/35.6/46.32 billion yuan in 2022 / 23 / 24, with a year-on-year increase of 42.9% / 34.0% / 32.5% 1% 。 The net profit attributable to the parent company was RMB 2.04/27.7/3.72 billion, with a year-on-year increase of 31.0% / 35.9% / 34.5% 1%。 Maintain the investment rating of Buy-A and give a six-month target price of 52.64 yuan, equivalent to 60 times the dynamic P / E ratio in 2022.
Risk warning: the spread of the epidemic affects business delivery; The investment in information technology such as education and medical treatment is less than expected.
