Event: Hande Information recently released its annual report of 2021 and the first quarterly report of 2022. In 2021, the company's annual revenue was 2.811 billion yuan, an increase of 12.74% over the same period last year; the net profit returned to its mother was 197 million yuan, an increase of 199.91% over the same period last year, deducting non-net profit of-162 million yuan, down 476.50% from the same period last year. In 2022, Q1, the company achieved revenue of 712 million yuan, an increase of 8.99% over the same period last year, and a net profit of 348 million yuan, an increase of 1858.57% over the same period last year.
Traditional business is sound, emerging business leads growth: on the revenue side, the company's traditional pan-ERP and ITO businesses maintain steady growth, achieving revenue growth of 4.78% and 11.66%, respectively, laying the foundation for revenue growth. Emerging businesses (industrial digitization and financial digitization) accounted for 40.04% of revenue in 2021, an increase of 4.12 percentage points. The rapid growth of the two businesses during the reporting period (2021, 25. 64%, 20. 22, Q1, 23. 17%) became the main driving force behind the company's revenue growth.
Delivery optimization, gross profit margin improvement: the company firmly promotes the self-research of independent software products and the reform of the delivery model, and the gross profit margin optimization has begun to bear fruit. In particular, the gross profit margin of emerging businesses has increased significantly in 2022Q1, reaching 31.99% (+ 7.35pct), which has directly led to the increase of the company's overall gross profit margin (+ 5.12pct).
In terms of expense rate, the company's sales / management / financial expense rate increased by 1.59pct/0.14pct/0.6pct in 2021. Affected by the epidemic in 2020, the company was unable to fully carry out business activities, and the sales expenses were reduced. In 2021, the company resumed normal production and operation activities, which led to an increase in sales costs.
2022Q1 deducts non-net profit to reverse losses, performance inflection point or present: profit end, the company's non-recurrent profit and loss during the reporting period was 359 million yuan (2021) and 327 million yuan (2022Q1), mainly due to the disposal and sale of some subsidiary shares with valuation growth, resulting in a larger investment income. After deducting non-recurring profit and loss, the company deducted non-net profit for four consecutive quarters as a result of the increase in total operating costs and the increase in the rate of expenses in 2021. In the first quarter of 2022, thanks to the improvement in delivery efficiency, the gross profit margin of the main business increased to 29.28%. The company achieves deduction of non-net profit (20.4438 million yuan) to reverse losses.
Investment suggestion: in 2021, the company's revenue grew steadily, and the return net profit benefited from the investment income from the disposal of subsidiary shares, but the operating profit and loss was under pressure due to the increase in total operating costs and expense rate. In the first quarter of 2022, the company reversed its losses by deducting non-net profits by optimizing the mode of delivery. We expect that on this momentum, the company will further optimize the mode of delivery, reduce costs and increase efficiency, and then increase the level of gross profit and achieve sustainable growth of net profit. From 2022 to 2024, we expect the company to achieve operating income of 3.317 billion yuan, 4.056 billion yuan and 5.076 billion yuan, net profit of 404 million yuan, 358 million yuan and 548 million yuan, EPS of 0.46,0.40 and 0.62 respectively, corresponding to PE of 15x, 17x and 11x, maintaining the "overweight" rating.
Risk tips: the speed of new business development is not as fast as expected; market competition intensifies; technological R & D transformation is not as expected; brain drain risk.