Introduction to this report:
As a leading state-owned ERP enterprise, the company relies on Inspur Group and is expected to continue to benefit from the wave of domestic alternatives. At the same time, as customers of state-owned state-owned enterprises achieve new breakthroughs and the small and medium-sized enterprise market is gradually gaining strength, future revenue growth may exceed expectations.
Summary:
For the first coverage, a “gain” rating was given, and the target price was 4.41 yuan. The company's revenue for 2024-2026 is estimated to be RMB 100.00, RMB 121.69 and RMB 14.325 billion, with net profit attributable to mother of RMB 3.38, 6.22, and RMB 775 million, respectively, and EPS of RMB 0.30/0.54/0.68 respectively. As an enterprise-level service leader, the company gave a target price of 4.41 yuan according to PE valuation, corresponding to 14.92 times PE in 2024. Covered for the first time, a “gain” rating was given.
Leading state-owned ERP companies rely on Inspur Group, and enterprise cloud transformation is improving steadily. The actual controller of Inspur Digital Enterprise is the Shandong Provincial State-owned Assets Administration Commission. The state-owned asset background of large ERP companies has natural trust and endorsement advantages, as well as one-stop integrated supply advantages and ecological synergy advantages, so the company is expected to build a moat in the field of domestic substitution. The company's business mainly includes two parts: traditional ERP and cloud product business. The cloud transformation strategy was implemented in 2017. The cloud business CARG reached 48% in 2019-2022, which has become the company's main growth point, and the share of cloud business continues to increase.
Considering the relatively high gross profit of the cloud business, the company's profitability is also expected to increase further.
ERP localization has broad prospects, enterprises going to the cloud has become an inevitable trend, and the penetration rate of the domestic industry continues to rise. Foreign ERP vendors have a first-mover advantage and seize the market with technology and product advantages in the early stages. In 2023, China's large enterprise ERP software market will still be dominated by foreign companies, and there is plenty of room to increase the domestic ERP penetration rate. In the context of the localization of Xinchuang, ERP is receiving attention as the core management system of enterprises. Under the catalyst of various policies, it is expected that the market share of domestic ERP will increase steadily. As a leader in this field, the company is expected to continue to benefit from the Xinchuang business.
Focus on state-owned state-owned enterprises to achieve new breakthroughs and enter the small and medium-sized enterprise market. The company has completed product system restructuring. The Haiyue PaaS platform maintains the top overall competitiveness of APaaS in the country. It is seizing the digital technology base market for large enterprises. Leading customers have frequently conquered it, and its position in the high-end market has been further consolidated and enhanced. As the company focused on state-owned state-owned enterprises to achieve new breakthroughs, the company increased the small and medium-sized enterprise market and released Inspur Haiyue SME intelligent ERP InSuite 3.0, with a large pre-configured enterprise-level AI model. The product advantages of being easy to use right out of the box, small, quick and easy to use help the company quickly penetrate the long-tail market, and the related revenue growth rate may exceed expectations in the future.
Risk warning: the risk of untimely product development upgrades and increased competition in the ERP and cloud service markets