occurrences
The company released its three-quarter report on October 28, 2021. It achieved operating income of 372 million yuan in the first three quarters of 2021, achieved net profit of -235 million yuan to the mother, and net profit of -248 million yuan after deduction. At the same time, the company issued a draft equity incentive plan to award 1,779.831 million restricted shares, accounting for 3.75% of the company's total share capital, with a grant price of 31.85 yuan.
Comment:
1. The cloud product business continued to increase rapidly. The growth of strategic software such as containers clearly drove the company's revenue of 372 million yuan in the first three quarters of 2021, an increase of 53.27% over the previous year. Of these, the company achieved revenue of 123 million yuan in the single quarter of 21Q3, an increase of 25.09% over the previous year. The company's Q3 single-quarter growth was lower than expected. We believe that it is related to the impact of the epidemic. Guimo's net profit - 235 million yuan, after deducting non-Gumo's net profit - 248 million yuan, of which 21Q3 net profit was 88.6482 million yuan, deducted The net profit of the non-return mother was 94,612,600 yuan. The increase in loss was mainly due to the company's increase in sales and R&D expenses. We believe that sales and R&D investment reflect the strategic center of the company's sales system construction and product capacity building, providing momentum for the company's continued business growth.
Looking at the product level, the company's cloud product revenue in the first three quarters was 272 million yuan, an increase of 87.9% over the previous year. Among them, strategic software increased 650.91% year on year, hyperfinance contract ratio increased 119.87%, and distributed storage increased 197.03% year on year. The growth of containers and multi-cloud management platforms in strategic software was clearly driven by the growth of containers and multi-cloud management platforms. The company's Kubesphere open source container platform continues to receive increasing attention, and the gap between the number of GitHub stars and second place has narrowed to less than 1000 (the gap was 3000+ at the beginning of the year).
2. The equity incentive plan sets up a double assessment mechanism. The scope of incentives covers nearly 1/5 employees. The company issues an equity incentive plan, awarding a total of 1,779.831 million restricted shares to 107 people including core technology and management personnel. The number of incentives accounted for 18.94% of the total number of employees at the end of 2020, and the number of incentive shares accounted for 3.75% of the company's total share capital (of which the initial grant and reserve portion accounted for 3% and 0.75% respectively). Judging from the incentive performance targets, the company has set up a double assessment mechanism for corporate performance and individual performance: 1) The company's performance assessment target is based on 2021 gross profit or operating income, and the 2022-2025 gross profit and revenue growth rates are not less than 25%/45%/60%/80% or 20%/40%/60%/80%, respectively. Among them, the first assessment years granted and reserved were 2022-2024 and 2023-2025 respectively. We believe that using gross profit as an assessment indicator shows the company's concern about profitability. 2) The assessment of individual performance is mainly based on the individual's performance rating for the current year, corresponding to 100%/80%/0% of the number of shares to be acquired that year, respectively. We believe that incorporating individual performance into the assessment mechanism at the same time will help to further stimulate employees' strict requirements for themselves and their motivation to work, and bind the common progress of individuals to the company.
Considering that the company's overall revenue for 21Q3 fell short of expectations and that the company increased sales and R&D investment, we lowered the 2021-2023 revenue forecast to 600/840/1,176 million yuan (the original forecast was 621/870/1,218 million yuan), and the net profit forecast was -2.58/-1.83/-902 billion yuan (original forecast -217/-175/-104 million yuan), maintaining the “buy” rating.
Risk warning: Competition in the cloud computing industry is fierce; with continuous investment in R&D and sales, the company may remain in a state of loss within a few years; risk of stock price fluctuations in the short term, etc.