Investment highlight
Cover Guangyun Technology for the first time (688365) to give a rating to outperform the industry, with a target price of 11.00 yuan. Guangyun Technology is the leader in the field of domestic e-commerce SaaS. We are optimistic about the growth potential of the company's future e-commerce SaaS business and the product ecological layout of self-research + investment for the following reasons:
Dig deep into the big market of e-commerce services. Retail sales of online goods and services in China reached 13 trillion yuan in 2021, with a compound growth rate of 20.4% from 2016 to 2021. We expect to maintain steady growth in the future. E-commerce service industry is the infrastructure behind e-commerce, and e-commerce SaaS is one of the supporting services. According to the data of Toubao Research Institute, the retail e-commerce SaaS market will reach 10 billion yuan in 2021, will grow to 38.5 billion yuan in 2025, and 2021-2025CAGR will reach 30.9%.
Small and medium-sized business is a cash cow business, with deep accumulation, steady growth and strong profitability. At the beginning, the company focused on small and medium-sized e-commerce SaaS products, a wide range of product categories, its express assistant, super store manager products lead the trade management, commodity management and other important tracks. The company's core competitiveness includes a rich user base and word-of-mouth (the number of paid households for a variety of products is close to 400000), peak stability and technological innovation, product matrix layout, rich experience in post-merger integration, etc. Small and medium-sized merchants have good profitability (net interest rate is 30%), which is the company's cash cow business. We expect to maintain steady growth as the multi-platform strategy advances in the future.
The business of big merchants drives the rapid growth of revenue, which will further transform into a platform company in the future. 1) since 2018, the company has increased its R & D investment, launched e-commerce SaaS products aimed at medium and large merchants, including Fast Mac ERP and Fast Mac Design, acquired deep drawing intelligence focusing on KA customers, and quickly set up offline direct sales teams. We expect this part of the business to be a major contribution to the company's revenue growth in the future. 2) on the basis of self-research, the company continues to further improve the product matrix and service ecology through equity investment, enhance its ability to provide overall solutions, and evolve into a platform company.
What is the biggest difference between us and the market? We have more confidence in the promotion of the company's big merchants, e-commerce SaaS business.
Potential catalyst: the development of Taowai e-commerce platform service market; e-commerce ERP demand for further expansion.
Profit forecast and valuation
We estimate that the EPS of the company from 2022 to 2023 will be-0.09 yuan and-0.04 yuan respectively. Cover Guangyun Technology for the first time to outperform the industry rating, the target price of 11 yuan, compared with the current stock price has 28% upside space. The target price is based on the 2022 SOTP valuation method, and the company's business is divided into two parts: the traditional business and the large merchant SaaS. We assume that the net profit margin of the traditional business is maintained at about 30% and give it a valuation multiple of 20 times 2022 price-to-earnings ratio. Large and medium-sized merchants are the main growth drivers in the future, giving them a valuation multiple of 9 times the 2022 market-to-sales ratio.
Risk
The number of paying customers for traditional products is declining; the promotion of new products is not as expected; the e-commerce platform is dependent; and the sales and R & D expenses are higher than expected.