The company is a leading IT distribution and services provider in the Asia-Pacific region, accelerating the transformation of cloud computing and digital business layout.
Recently, the company acquired cloud management services asset RightCloud, and deeply integrated with it, the overall value of the company is expected to be increased. On the other hand, the company is deeply engaged in the basic distribution business, transforming from a traditional distributor to an IT integrated service provider with cloud as the core growth point, and further enhancing its competitiveness.
Company Overview: the leading IT distribution and service provider in the Asia-Pacific region. Weishijiajie Group was founded in 1991 and listed on the main board of Hong Kong in 2002. In the 18 years since it went public in 2002, the average growth rate has reached 29%.
In 2019, the group's sales reached HK $66.2 billion, with a net profit of HK $810 million, a record high.
The company's business includes enterprise systems, consumer electronics, accessories, cloud computing, upstream partners more than 300 global top 500 information technology enterprises, downstream business partners more than 50000, a large sales network. Benefiting from the rapid development and continuous upgrading of the IT industry, the company's growth space is expected to continue to open.
Cloud services: power cloud management services to create a new engine of performance growth. The company's cloud computing partners include Aliyun, Huawei Cloud, AWS, Microsoft Corp Azure, VMware and so on. In 2019, the global cloud computing market was $188.3 billion, + 21% compared with the same period last year. According to Gartner, CAGR will remain at around 18% in the next four years. The market size of China's third-party cloud management services is US $560 million in 2019, compared with the same period last year. Gartner predicts that CAGR will reach 54.7% in 2019-2023 and the market size is expected to reach US $3.21 billion in 2023. The company is expected to fully benefit from the high growth of the industry. Recently, the company acquired the cloud management service company Cloud Star data core asset RightCloud, adding to the in-depth layout of the MSP field, and the deep coordination of the two continues to enhance the core competitiveness. The layout of cloud management services will bring incremental business opportunities and is expected to continue to improve profitability.
IT distribution: comprehensive coverage of the IT industry, channel value stable distribution business base. The company's upstream cooperation covers cloud computing / big data, artificial intelligence / RPA, data storage, data analysis / visualization, infrastructure, information security, mobile Internet, games and entertainment, IoT applications, wearable devices and virtual / augmented reality, contributing to the company's in-depth understanding of the whole field of IT. In terms of products, the company independently developed OA products and automated office systems, and has passed the compatibility certification of Kirin and Tongxin two major domestic operating systems. In 2019, the company continues to strategically expand new products, deepening the layout of "Cloud Computing + big data + artificial Intelligence", and is gradually transforming from traditional IT distributor to IT integrated service provider. The upgrading of industrial positioning will help the company to fully understand and serve customers and further enhance its industrial voice.
Risk factors: cloud business development is not as expected; Xinchuang's progress is not as expected; post-acquisition synergy is not as expected.
Investment suggestion: the company is gradually transforming and upgrading from traditional IT distributor to IT integrated service provider, accelerating the digital transformation of layout enterprises and cloud computing-related business, while the company acquires and distributes MSP-related business, the value is expected to be further enhanced. It is estimated that the company's net profit for 2020-2022 is HK $9.09 billion, corresponding to EPS of HK $0.63 and HK $0.77, respectively. Using the segment valuation method, the target market value of the distribution business is HK $13.28 billion, and the target market value of the cloud computing business is HK $2.5 billion. The overall target price is HK $10.86. Cover for the first time, giving a "buy" rating.