Since the beginning of 2020Benefit from the accelerated commercialization of Wechat and the rise of private e-commerceThe shares of Weimeng and Youzan have been climbing. Weimeng rose 311% for the whole of 2020, and YTD still rose by an astonishing 136% at its peak in 2021.

However, due to the recent rise in US bond yields to depress the valuations of growth stocks, as well as their own performance valuation mismatch, Weimeng shares fell back sharply.

Performance in 2020: overall growth slows, SAAS growth is not surprising enough

Regardless of the impact of database deletion on revenue and profitsThe adjusted total income was 2.064 billion yuan, an increase of 43.7% over the same period last year.Adjusted gross profit of 1.098 billion yuan, an increase of 37.8% over the same period last year; adjusted EBITDA of 299 million yuan, an increase of 78.3% over the same period last year; and adjusted net profit of 108 million yuan, an increase of 39.1% over the same period last year.

What the market is most concerned aboutCore SAAS business, revenue of 717 million yuan, an increase of 41.6% over the same period last yearThis is still on the basis of a small contribution to the performance of the acquisition of Haiding Information in November 2020.So compared with 46% in 2019, the decline in income growth is still quite obvious.. In addition, withCompared with the 90% growth rate of SAAS business in three quarterly reports, it is obviously not a surprise..

Specifically look at the operating indicatorsThe number of paying merchants and ARPPU increased by 23% and 15% respectively, and the growth rate was stable. 28% of the new paying merchants were more eye-catching.. ButThe wastage rate increased by nearly 4 percentage points.. The management explained that "some small and medium-sized enterprises may lose due to poor management due to the epidemic."In the future, with the promotion of key customer strategy, the turnover rate will decrease in the long run.".

Second, the future focus: big customer + TSO full-link marketing strategy

Guest-oriented:

1) Smart retail

Smart retail businessLast year, the growth rate exceeded 200%, the number of brand customers increased to more than 600, and the customer unit price increased by 30%.. The whole smart retail is also owned by Weimeng.Percentage of revenue from major customer businessFrom 19 years10% to 20% in 20 yearsIt is expected to account for 30% this year.. It will continue to climb in the next few years, possibly reaching 50%.

2) sea tripod

Integrate with Haiding, quickly cut into convenient commercial supermarkets and commercial real estate.Haiding currently accounts for 58% of commercial real estate and 35% of convenience stores.The integration with Haiding will accelerate the penetration of Weimeng in these two industries.

3) Smart catering

Acquisition of seatingAt present, Weimeng is in a leading position in the catering industry with Wechat private domain as the carrier.. Intelligent catering, catering, dining hall, food and takeout integrated solution. In 2020, it has a great impact on the catering industry, and the growth of catering income is not obvious.However, the average customer unit price ACV (annual contract value) increased by 30-40%, mainly due to the development of customers from single-store customers to more than 5-30 chain catering users..

TSO full-link marketing:

In 2021, Weimeng will upgrade.TSO (Traffic+SaaS+Operation) Trinity full Link Marketing solutionTo help enterprises achieve steady business growth in all aspects, such as flow, public and private domain, operation, etc. It is expected that in the future, Traffic will contribute revenue in the form of advertising rebates, SaaS will contribute revenue in the form of subscription model, and Operation will contribute revenue in the form of CPS or CPA.TSO is expected to further tap the potential of VIP business and contribute to higher performance growth in the future.

Valuation: CICC's target price for 2022 is HK $28.50

Based on the adjusted income caliber of the company2022 SOTP valuation, maintain target price of 28.50 yuan. Among them, forDigital business gives 20 times the valuation multiple of 2022 Pchart S.ForThe digital media business gives 30 times the valuation multiple of 2022 Pram E.(maintain the valuation level of the original precision marketing business)

Note: the disclosure caliber of Weimeng's business has been adjusted in 2020, and the existing disclosure caliber is digital commercial business, including subscription solutions (SaaS business) and merchant solutions (parts of precision marketing business recognized by net method, and future merchant services charged by TSO percentage model); digital media business is the part of previous precision marketing business confirmed by total amount method.CICC believes that the company's latest revenue disclosure method can better reflect the integration and synergy between SaaS and precision marketing business.It is also similar to the disclosure method of Shopify Inc, the leader of global e-commerce SaaS.To facilitate investors to better understand the company's business.