Incidents:
1) The company announced its 2021 financial report, achieving operating income of 340 million yuan, an increase of 107.87% over the previous year; Guimu's net profit of 11.43 million yuan, an increase of 55.90% over the previous year; and after deduction of Fumo's net profit of 6.81 million yuan, a decrease of 52.66% over the previous year;
2) It is proposed to distribute a cash dividend of 0.60 yuan (tax included) for every 10 shares, with a transfer of 5 shares for every 10 shares.
Commentary:
The company's transformation of “business to enterprise service, enterprise service to SaaS” has achieved remarkable results, with revenue increasing 108% year-on-year in '21. The company's business has been in a period of transformation and adjustment in the past two years. The business strategy upgrade was completed in the second half of 2021, that is, it completed the transformation from TOC founder training to the TOB enterprise service field, and the SaaS upgrade of enterprise services. The results after the transformation were remarkable, which was reflected on the revenue side. The revenue for a single quarter increased sharply from month to month. 2021Q1-Q4's quarterly revenue was 0.29/0.70/0.87/154 million, respectively. On the profit side, in 2021, the company's gross profit margin was 46.7% (-13.6 pct) and the net interest rate after deduction was 2.0% (-6.8 pct). Among them, traditional business enterprise acceleration (founder training) gross margin was the same as last year. The reason for the decline in overall profit margin was mainly the increase in costs and expenses associated with new business expansion. In particular, the cultivated intellectual property service business is in the investment period of the first year, and the R&D investment of SaaS platforms has increased by 175.5% to 33.37 million yuan, but related business orders and revenue are expected to increase significantly thereafter. With large-scale expansion of business, profit margins are expected to pick up.
The enterprise accelerated the steady development of the cornerstone business, and the enterprise service innovation business grew rapidly. Currently, the company's business is divided into two major segments:
1) Enterprise acceleration services: Revenue was 147 million yuan, an increase of 43.9% over the previous year, accounting for 43.4%.
The enterprise acceleration service is a strategic management consulting service for business founders. It is the company's traditional basic business since its establishment, bringing stable and sustainable operating income to the company.
By the end of the reporting period, the number of accelerated service customers of the company was 8,662, an increase of 31% over the previous year; contract orders at the end of the period were 67.56 million yuan, an increase of 16.62 million yuan over the same period last year; 2) Enterprise service: revenue was 182 million yuan, an increase of 259.3% over the previous year, accounting for 53.42%. In 2021, the company focused on a comprehensive upgrade of the enterprise service business and built a new product matrix. On the basis of the original urban expansion and marketing services, SaaS model services, fiscal and taxation services, intellectual property services, etc. were added. The new business revenue accounted for 34% of total revenue. During the reporting period, the number of corporate service customers of the company increased by 5,843, an increase of 3484% over the previous year; the amount of new orders was 146 million yuan, an increase of 96% over the previous year.
The launch of the “Enterprise Service SaaS” business accelerated the empowerment of specialized, innovative enterprises, and also created a second growth curve for the company. The reason for the company's determined transformation to “business enterprise service, enterprise service as SaaS” is that there is plenty of room for TOB, and it continues to be more profitable, along with the entire life cycle of small and medium-sized enterprises. The company's transformation has achieved phased results. New products were gradually launched in the second half of 2021, and the enterprise intellectual property SaaS platform, Heima Science and Technology Innovation Cloud, was launched at the end of September, contributing to a sharp increase in revenue in the fourth quarter. At the end of 2020, the company sought business transformation and upgrading. 2021 coincided with the policy trend of “specialization and innovation plus Beijing Stock Exchange”. The time and location were favorable. The company was able to quickly mobilize resources to serve the development trend of the industry. The value of previously accumulated resources (industrial resources, urban resources, etc.) has reached the release period, and as SaaS services advance, we expect the company's performance to be released at an accelerated pace, taking the lead on the revenue side, and subsequent profit margins will show an upward trend.
Investment advice: Currently, small and medium-sized enterprises are receiving policy dividends. The company mainly focuses on service services for small and medium-sized enterprises, and will also take advantage of the rapid development of small and medium-sized enterprises to set sail. On the one hand, the company has been deeply involved in the training (enterprise acceleration) business for more than ten years. The development of the training (enterprise acceleration) business is stable and sustainable, and the company's basic market is stable. On the other hand, the company's business was upgraded to the B2B enterprise service business, entering the intellectual property service business. A huge customer base, good government partnerships, and SaaS service system brought natural advantages to the expansion of the company's science and innovation intellectual property service business. We are firmly optimistic about the future of the company's science and innovation intellectual property service business. We expect the company's revenue for 2022-2024 to be 53/82/1.17 billion yuan respectively, with outstanding growth; net profit is 0.35/0.74/135 million yuan respectively. The valuation of the company's various businesses was added together through the segmented valuation method. In the end, we gave the company a target market value of about 4.8 billion yuan in 2022, and the corresponding target price of about 44 yuan. Give it a “Buy-A” rating.
Risk warning: Market competition intensifies, the impact of industry regulation and market management on the company's business growth, and new business expansion falls short of expectations.