Event: Mercedes-Benz Information released Annual report 2021 and Quarterly report 2022. The total operating income in 2021 was 3.6 billion yuan, an increase of 49.6% over the same period last year; the net profit from home was 240 million yuan, an increase of 15.7% over the same period last year; and the non-net profit was 230 million yuan, an increase of 9.9% over the same period last year. In 2022, Q1 realized revenue of 1.29 billion yuan, an increase of 103.6% over the same period last year, a net profit of 110 million yuan, an increase of 40.1% over the same period last year, and a non-net profit of 110 million yuan, an increase of 42.14% over the same period last year.
Under the background of "double gigabit" network wave, the main business is developing at a high speed. In order to respond positively to the "double Gigabit" network construction and development plan, the company cooperates with China Mobile Limited, China Telecom Corporation, China Unicom, China Radio and Television and other communication operators, the strategy of giving priority to smart home business and supplemented by 5G communication business and mobile reading business is used to quickly lay out the basic network and smart home market. In 2021, the company's smart family business and 5G communications business revenue ushered in rapid growth, achieving operating income of 2.66 billion yuan, a year-on-year growth rate of 69%. The sharp increase in Q1 performance in 2022 was mainly due to the growth of Shenzhen Zhaoneng subsidiary.
5G communications has entered the stage of large-scale commercialization, raising funds to help the future development. The company started 5G communication service in 2021 and won the bid for China Radio and Television and China Mobile Limited 700M/5G network in July 2021.
As of the date of the annual report announcement in 2021, the winning bid amount of the company's 5G communications business is about 904 million yuan (including tax). In addition, the company will fully invest 580 million yuan in the development of 5G communications business by issuing shares to specific targets. The company has entered the stage of large-scale commercialization in the field of 5G communications, and 5G communication equipment business will become a new driving force for future performance improvement.
Strategic cooperation cuts into meta-universe, focusing on the layout of virtual digital human. In March 2022, the company reached a strategic cooperation with Unicom online Information Technology Co., Ltd., Xinhuanet Co., Ltd., to jointly build a meta-universe joint laboratory, focusing on the research and development of industrial alliance, industrial fund and VR/AR, enterprise digital employees, family digital members, digital twins, industry applications and other achievements in smart cities, smart enterprises, smart families, cultural and travel entertainment, 5G news and other fields. At the same time, the company focuses on the field of virtual digital human, and plans to provide personalized virtual digital human services and charge fees for the enterprises, families and individual customers of communication operators. At present, the virtual digital human used for live streaming and video ring back tone production has entered the testing stage. Relying on the existing massive and high-quality digital copyright resources, meta-universe business can be expected in the future.
Profit forecast and investment advice. It is estimated that the net profit from 2022 to 2024 will be 410 million yuan, 510 million yuan and 610 million yuan respectively, and the corresponding PE will be 13 times, 10 times and 9 times respectively. The company's net profit from 2022 to 2024 is 35.6%, but under the current stock price, it is only 13 times the PE in 2022. We believe that the company is currently in a valuation depression, and business such as smart family is expected to continue to grow in 2022. To sum up, we maintain our "buy" rating and recommend attention.
Risk hints: the risk of product research and development failure; the risk of intensified market competition; the risk of industrial policy change.
