Results exceeded expectations in the first half of 2021
Ming Yuan Cloud Group announced the results for the first half of 2021: income was 970 million yuan, up 45.2% over the same period last year; adjusted net profit was 170 million yuan, up 31.3% over the same period last year. Both income and adjusted net profit exceeded our and market expectations, mainly due to the excellent performance of Yunke products. SaaS revenue increased 65.5% year-on-year to 550 million yuan, net profit was-26.95 million yuan; ERP business revenue increased 25.1% year-on-year to 420 million yuan, net profit was 140 million yuan, corresponding net profit margin 32.8%. As of June 30, 2021, the amount of long-term SaaS contracts (excluding taxes) outstanding by the company reached 840 million yuan, an increase of 50.8% over the same period last year.
Trend of development
Maintain strong growth momentum and secure core business advantages. In terms of SaaS business, the revenue of mature products Yunke increased significantly by 82.1% to 430 million yuan compared with the same period last year, an increase of 6.3% over the same period last year. This is mainly due to the rapid increase in unit price of customers (up 36% year on year) while Yunke maintained a high market penetration (covering 16200 sales offices in the first half of the year). Cloud chain revenue increased 14.1% to 78.96 million yuan compared with the same period last year, which rebounded from the previous year. Cloud procurement revenue increased by 76.7% year-on-year to 20.03 million yuan, while cloud space revenue increased by 25.2% to 22.42 million yuan. In terms of ERP business, the company has made remarkable achievements in developing industry leaders and sinking markets, and software licensing revenue recorded a year-on-year growth of 37.6%. The revenue from the implementation of services has decreased compared with the same period last year, which is affected by the epidemic situation and the distribution of signing time.
Focus on the skyline cloud platform and speed up the construction of a new pattern of "SaaS+PaaS+ ecology". Ming Yuan Cloud Group continued to increase investment in Skyline Cloud platform in the first half of 2021, tamping the five core competencies of agile development, global integration and process-driven, developing customer data platform CDP to build data management capability for C-side customers, and increasing key investment in key technologies such as AIOT and VR. As of June 30, the company's Skyline team had about 330 people, and it is expected to expand to 400 by the end of the year. Management said that Mingyuan will focus on building three plans for new products / technologies: 1) the lighthouse project to create an industry benchmark for "SaaS+PaaS+ ecology". 2) Star Project, train more than 1000 developers, and empower developers to develop with low code and zero code. 3) Ecological plan, create skyline application market, connect ecological partners, and jointly empower the digitization of the real estate industry.
Profit forecast and valuation
The forecast of income and adjusted homing net profit in 2021 and 2022 will remain basically unchanged. Maintain an outperform industry rating and target price of HK $58 (based on 32 times 2022 market-to-sales ratio). The company is currently trading at 16 times 2022 price-to-sales ratio, and our target price corresponds to an upside of 92.7%.
Risk
The competition intensifies; the risk of brand awareness; the prosperity of the real estate industry is declining.