The company is a new e-commerce SaaS leader, leading the industry in terms of profitability, and its platform advantages are obvious. The company's future plans 1) consolidate the basic market of small and medium e-commerce through multi-platform expansion+product self-development and outreach; 2) explore large-scale e-commerce ERP markets through product upgrade+marketing efforts. The first coverage gave an “increase in holdings” rating.
A new generation of e-commerce SaaS, leading the industry in profitability. The company's core business is to provide SaaS products to e-commerce merchants. It is the first company listed on the Science and Technology Innovation Board in the e-commerce SaaS industry. The company's e-commerce SaaS products cover many functional categories such as store management, marketing promotion, transaction management, customer service management, warehouse management, etc., and have penetrated various types of e-commerce platforms such as Taobao, Tmall, JD, Pinduoduo, and Hungry. The company is one of the few enterprises in the industry with profits reaching the level of 100 million yuan. It maintains a healthy operating cash flow, and has high profitability and quality.
Take advantage of the e-commerce SaaS style, use first-mover and products to form platform advantages, and grow together with merchants. E-commerce SaaS is a high-quality vertical SaaS racetrack. The market size leads the industry's vertical SaaS (accounting for about 26%). Because of its unique Internet attributes, it also has a high payment penetration rate and low customer acquisition costs. The company has formed a large platform advantage through first-mover and products. Currently, the penetration rate on Taoji platforms is over 30%, and the total number of paying customers is about 1.3 million.
The advantages of the platform give the company high customer reach and customer stickiness, and the company is expected to benefit from the long-term growth of platform merchants.
Multi-platform expansion+product self-development and outreach to consolidate the basic market of small and medium-sized e-commerce. The company's small and medium-sized merchants have a rich SaaS product line and formed a subscription-based model, which is an important support for the company's business revenue. On the one hand, the company plans to achieve multi-platform development of non-Taoyuan platforms such as Pinduoduo through an early entry+commission model; on the other hand, the company will strengthen product self-development and outbound mergers and acquisitions to enhance the overall ARPU of small and medium-sized SaaS products through unit price increases and customer repurchases. We anticipate that ARPU, the company's small to medium SaaS products, may gradually increase to 300-500 yuan.
Product upgrade+marketing efforts to compete for ERP market space for medium and large e-commerce businesses. The company is speeding up the promotion of a series of products such as Kuaimai ERP for big sellers. The company plans to first use clothing e-commerce as an early entry point for Kuaimai series products, strengthen sales team building mainly through offline direct sales, and continue to promote target users and direct sales promotion of products. It is expected that the company will maintain the expansion of its sales team of several hundred people in 2020-2021. Kuaimai series products have a higher ARPU value than small to medium e-commerce SaaS products. Medium and large e-commerce businesses are expected to become the company's next major growth point, driving the company's revenue scale to rise exponentially.
Risk factors: The multi-platform expansion of small and medium-sized e-commerce SaaS products fell short of expectations; the increase in ARPU value of Taoyuan platform customers fell short of expectations; sales channels and customer expansion of Kuaimai ERP products fell short of expectations.
Investment advice: The company's revenue for 2020-2022 is estimated to be 542/665/826 million yuan, net profit of 1.04/1.18/151 million yuan, and the corresponding EPS is 0.26/0.30/0.38 yuan. The first coverage gave an “increase in holdings” rating.