Guide to this report:
The 2022Q1 performance ushered in the dawn of a reversal. The revenue side's own products gained strength, and the profit side investigated omissions and filled gaps. 2022 was the year the company's performance reversed
Investment points:
Maintain the “increase in holdings” rating and maintain the target price of 12.03. According to the company's annual report and quarterly report data, the profit forecast for 2022 and 2023 was raised, and the profit forecast for 2024 was added. The company's EPS for 2022-2024 is expected to be 0.64 (+0.03) yuan, 0.50 (+0.02) yuan, and 0.74 yuan, respectively.
Maintain the target price of $12.03 and maintain the “increase in holdings” rating.
The revenue side returned to a growth trajectory, and the profit side established a reversal trend. The company published its 2021 annual report and 2022 quarterly report. The company achieved revenue of 2,811 million yuan in 2021, an increase of 12.74% over the previous year. Revenue returned to growth after two years of decline, achieving a net profit of 197 million yuan, an increase of 199.91% over the previous year, after deducting non-return net profit of 162 million yuan. In the first quarter of 2022, we achieved revenue of 712 million yuan, a year-on-year increase of 8.99%, profit of 348 million yuan, an increase of 1858.57% over the previous year. After deducting non-attributable net profit of 204.438 million yuan, we reversed losses year-on-year.
Own products guarantee revenue growth. Enterprise IT faces deepening demand from unified packaged software to sales, production, finance, and supply chain, and peripheral demand for ERP has begun to grow rapidly. The company's independent products, C2M and GMC business, are expected to grow rapidly, benefiting from the enterprise's demand for informatization in the periphery of ERP, and the pan-ERP and ITO business are expected to maintain steady growth in the future.
A number of financial indicators have begun to recover, and 2022 ushered in a reversal in earnings. First, by divesting Zhen Yun and Zhenhui's subsidiaries, losses passed back to listed companies under the Equity Act were reduced. Second, by strengthening repayment, the apparent calculation of impairment losses on accounts receivable is reduced. Third, the relative depreciation of the renminbi helps reduce the company's exchange losses. Coupled with the restoration of gross margin, we believe the company's operating profit margin will increase to around 5% in 2022, +10 pct compared to the same period last year.
Risk warning: macroeconomic fluctuations, rising labor costs, promotion of own products falling short of expectations