\u3000\u3000 Hand Enterprise Solutions Co.Ltd(300170) (300170)
Event:
The company issued the annual performance forecast for 2021 after the closing on January 18, 2022.
Comments:
It is estimated that the net profit attributable to the parent company is 190-245 million yuan, and the non recurring profit and loss is about 376 million yuan
In 2021, the company expects to realize a net profit attributable to the parent company of 190-245 million yuan, with a year-on-year increase of 189.15% – 272.85%, mainly due to the rapid development of the joint venture as a whole and its high recognition by the capital market. Therefore, the valuation has increased rapidly in recent years. In 2021, the company disposed and sold some shares of its subsidiaries to obtain a better return on investment. The company expects to deduct 186-131 million yuan of net profit not attributable to the parent company, and the non recurring profit and loss is about 376 million yuan. The main reasons are: the company has lost significant impact on the original associated enterprises and reclassified them as investment income generated by financial asset accounting; And receiving financial support funds from the registered area. After deducting non recurring profits and losses, the main reasons for the large decrease in net profit are as follows: 1) although the valuation of associated enterprises is high, they are still in the investment period as a whole. In 2021, the increase in losses of associated enterprises calculated according to the shareholding ratio of the company has increased, which has a certain impact on the net profit; 2) The company’s convertible bonds were listed in December 2020, and certain interest expenses were incurred in 2021; 3) The company has overseas business and assets. The relative appreciation of RMB in 2021 will bring certain exchange losses.
A new incentive plan was issued, which greatly encouraged the general manager
On December 8, the company issued the second stock option incentive plan for 2021 (Draft), which plans to grant 49.5 million stock options to 155 objects, accounting for 5.6% of the total share capital, and the exercise price is 7.77 yuan / share. Among them, 17.28 million stock options are proposed to be granted to Mr. Huang Yiquan, director and general manager of the company, which will help Mr. Huang Yiquan lead the company to a longer-term goal. The annual performance assessment objectives of stock options are: Based on the net profit in 2020, the growth rate of net profit from 2022 to 2024 will not be less than 80%, 100% and 120% respectively, which will help to mobilize the work enthusiasm of employees and improve the competitiveness of the company.
The company’s independent products are gradually mature, and c2m and GMC are expected to usher in rapid development
The company started with high-end ERP consulting services, continuously expanded its business boundary, evolved to a digital ecological integrated service provider, and gradually matured its own products. The demand of downstream customers of the company is strengthened and the digital investment is increased. Thanks to this, the c2m business of digital intelligence production and marketing and the GMC business controlled by the group, which are the independent products mainly developed by the company in recent years, are expected to achieve high growth in 2021. ERP has become an important entrance to the to B business. The company has more than 6000 high-end customers. The traditional pan ERP business and ITO business will grow steadily in 2021, laying a stable foundation for the overall operation and development. In the first half of 2021, the revenue of independent products in the company’s software sales and implementation business accounted for 35.24%, with a growth rate of 33.45%.
Investment advice and profit forecast
The company has made concerted efforts to build an integrated middle platform, and the proportion of independent product revenue has gradually increased, which has opened a new road of growth. It is predicted that the operating revenue of the company from 2021 to 2023 will be 2.790 billion yuan, 3.267 billion yuan and 3.819 billion yuan. Referring to the annual performance forecast of 2021, the net profit attributable to the parent company is adjusted to 214 million yuan, 123 million yuan and 143 million yuan, corresponding to 36.72, 63.79 and 54.93 times of PE. The company will continue to increase the investment in independent products and solutions, which will have a certain impact on the net profit margin. PS valuation method is more appropriate. In the past three years, the company’s PS has mainly operated between 2-6 times, maintaining the target PS of 3 times in 2022, with the corresponding target price of 11.09 yuan / share and maintaining the “buy” rating.
Risk tips
Covid-19 recurrent pneumonia; The risk of insufficient demand caused by macroeconomic downturn; Rising labor cost and brain drain risk; Intensified competition in IT consulting service industry; The promotion of integrated medium and Taiwan business was lower than expected
