Events:
Company announcement 2021 Annual report: in 2021, the company achieved revenue of 863 million yuan, an increase of 34.80% over the same period last year; a net profit of 248 million yuan, an increase of 1.53% over the same period last year; and a net profit of 221 million yuan, an increase of 31.89% over the same period last year.
1. The business is progressing smoothly and the quality of operation is significantly improved.
In 2021, the company's revenue from basic software, security products, smart emergency response, and government-enterprise digital transformation all achieved rapid positive growth, with revenue of RMB 3.33 million, respectively. The year-on-year growth rate was 23.62%, 30.02%, 67.94%, 42.68%, respectively. The company's middleware products cooperate with Huawei and Aliyun in ecology, market and other aspects. In 2021, the company's gross profit margin was 76.96%, reducing 2.98pct compared with the same period last year, and the sales expense rate was 21.43%, which increased 7.45pct over the same period last year, affecting profit performance. In 2021, the company's operating quality improved significantly, with net operating cash flow of 255 million yuan, a substantial increase of 106.95% over the same period last year, and accounts payable of 629 million yuan, an increase of 5.86% over the same period last year.
2. Industry Xinchuang drives performance growth, which is expected to accelerate in 22 years
Industry innovation represented by finance and telecommunications has been accelerating since 2021. In 2021, revenue from telecommunications, finance, military and other industries increased by 46.66%, 101.36% and 338.05%, respectively, supporting the trend of industry innovation. From the recent successful bidding of a number of domestic servers in the telecommunications industry, as well as the continuous increase in the number of bids related to financial innovation, we expect that the scale of industry innovation will continue to accelerate in 2022 and continue to expand in the process of continuous deepening in the next few years. among them, due to the large volume of the financial industry, which is expected to lead the industry Xinchuang, Dongtong as a domestic middleware leader will fully benefit.
3. Release a new fixed increase plan for 2.2 billion
On March 2, 2022, the company announced that it withdrew its previous fixed increase plan, terminated its strategic cooperation agreement with China Mobile Capital, and announced a new fixed increase plan, which intends to raise 2.2 billion yuan for three projects: the excellent capability improvement project of Tong series middleware products, the next generation sustainable operation security product development project based on artificial intelligence, and supplementary current funds. The fund-raising scale of the new fixed increase plan has increased, and the previous pricing issue has been changed to a competitive offering, which we believe gives more opportunities for investors to participate.
Profit forecast and investment advice: we believe that the company as a domestic middleware leader will benefit from the promotion of industry innovation. Considering that the company terminated the strategic cooperation agreement with China Mobile Limited and adjusted its profit forecast according to the company's annual report, the company adjusted its 2022-2023 net profit from RMB 567 million to RMB 348 million, with an estimated net profit of RMB 615 million in 2024, corresponding to the current market capitalization PE of 24.37x18.01max 13.76 times, maintaining the "buy" rating.
Risk tips: intensified competition in the industry; the promotion of industry innovation is not as expected; the progress of the fixed increase project is uncertain; systemic risk.