Report summary:
Incident: Guolian Co., Ltd. achieved revenue of 40.269 billion yuan in 2022, YOY +8.16%, net profit of the mother of Guomu of 1,126 million yuan, and YOY +94.63%. 2023Q1 achieved revenue of 13.156 billion yuan, YOY +8.39%, net profit attributable to the mother of 256 million yuan, and YOY +65.02%. The company adjusted some of its transactions to net revenue recognition. In a comparable manner, 2022 revenue increased 98.67% year over year, and 2023Q1 revenue increased 86.5% year over year.
Comment: The adjustment of the confirmation method led to a slight increase in revenue, and the level of cash flow was impressive. The company adjusted the revenue recognition method in 2022 and adjusted some transactions to net recognition. In 2022, the company achieved a total of 73.964 billion yuan of proprietary transactions, an increase of 98.67% over the previous year. Of these, the amount of proprietary transactions corresponding to the total amount method was 39.692 billion yuan, and the corresponding proprietary transaction volume according to the net amount method was 34.272 billion yuan, which maintained rapid growth. Net cash flow from operating activities was 1,371 million yuan, YOY +405.54%, mainly due to 1) the company's ability to bargain upstream and downstream; 2) the increase in upstream and downstream credit accounts for platforms, which can be paid more using acceptance bills; 3) the turnover of downstream transactions has accelerated, and the speed of repayment has increased.
Actively promote the “platform, technology, data” strategy and strengthen upstream and downstream cooperation. The company is actively promoting various strategies such as core suppliers and collective procurement from upstream and downstream, expanding its market share in existing vertical fields, expanding the platform horizontally, and continuously expanding categories to enhance its influence and bargaining power in the industrial chain and enhance upstream and downstream stickiness to the platform. At the same time, using digital factories as a starting point, the efficiency of enterprise operations is improved through digitalization, and the implementation of large-scale cloud factories is gradually shifting from transaction side empowerment to the full process from production to distribution to build new growth points. Currently, the three-year 100 Cloud Factory Plan will come to an end in 2023. Currently, the company has gradually formed a mature profit model, and it is expected that large-scale implementation of cloud factories will be further promoted in the future.
Investment in R&D has increased dramatically to improve digital service capabilities. In 2022, the company's R&D expenses were 133 million yuan, YOY +98.86%, and the company's R&D personnel reached 325, accounting for 27.17% of the total number of people. In terms of the League of Nations Resource Network, the company's self-developed big data algorithms and systems are currently in a leading position in terms of data particles. At the same time, it is also actively promoting the R&D and construction of the National Union Cloud Digital Technology Service System and Big Data Service System. It has now joined the Beijing International Big Data Exchange. Furthermore, AI technology entered an explosion period in 2023. Currently, the company has explored and applied a large number of AI technologies in the fields of intelligent recommendation, sales forecasting, procurement forecasting, and machine vision on e-commerce platforms, and is also expected to empower the company's digital service capabilities in the future.
Investment advice: It is expected to achieve net profit of 18.90/29.87/4,5536 billion yuan in 2023-2025, an increase of 68%/58%/52% over the previous year. The EPS was 3.79/5.99/9.10 yuan, and the corresponding PE was 16/10/7 times respectively, maintaining the “buy” rating.
Risk warning: the expansion of the new platform is not as fast as expected; there is a risk that gross margin will continue to decline