The company is the leading IT distribution and service provider in the Asia-Pacific region, with an annual performance that exceeded expectations in 2020. The company's deep layout of cloud management service business is expected to continue to benefit and open up a broad market space under the big wave of digital transformation and domestic substitution. Adjust the homing net profit forecast for 2021-2022 to HK $1.16 billion (originally HK $1.12 billion), and add HK $1.59 billion to the 2023 net profit forecast, corresponding to the EPS forecast of 0.95 pm for 2021-2022 (the original EPS forecast for 2021-2022 is HK $0.77max), maintaining the "buy" rating.
Item: on March 25, 2021, the company will issue its financial report for 2020. In 2020, the company's operating income was HK $70 billion, year-on-year + 6%, net profit HK $1.07 billion, year-on-year + 32%, earnings per share 75.54 Hong Kong cents, year-on-year + 32%, dividend HK $0.22, year-on-year + 32%. Shareholder return 16.5%, Hang Seng Index average return on equity for the same period 8.48%.
The performance exceeded expectations, the gross profit margin was healthy and stable, and the operating efficiency continued to improve. The company's 2020 net profit was HK $1.07 billion, + 32% compared with the same period last year, and its performance exceeded our previous expectations. Especially in H2 in 2020, the company's business recovered rapidly, with a turnover of HK $41.1 billion, a year-on-year increase of HK $650 million and a net profit of HK $650 million, an increase of 55% over the same period last year. In the 18 years since 2002, the average growth rate of the company's turnover has reached 28%, which continues to maintain strong growth. In terms of gross profit margin, the company's annual gross profit margin is 4.5%, which has been stable at 4.5% for three consecutive years. On the expense side, the annual sales expense / management expense rate is 1.63% and 0.86% respectively, compared with the same period last year-0.07pct/-0.07pct, reflecting the continuous improvement of the company's risk control ability and operational efficiency. The overall net interest rate rose from 1.2% in 2019 to 1.5% in 2020.
The core of enterprise system business is driven, and the growth rate of cloud computing business is up to 40%. In 2020, the company adjusted the split disclosure of the business again, and the current business is divided into three parts: enterprise systems, consumer electronics and cloud computing (the previous accessories business is split into each section). The income of the three major businesses of enterprise systems / consumer electronics / cloud computing is HK $409.1, 27.36 billion, respectively, compared with the same period last year. + 15%, 7%, 40%, accounting for 58%, 39%, 3% of turnover. Benefiting from the acceleration of enterprise digital transformation and the in-depth promotion of domestic substitution, the revenue growth rate of enterprise system is up to 15%, which is the core driver of business growth. Through its own strong channel system, in the era of rapid development of public cloud, private cloud and hybrid cloud, the company carries out cloud computing business in depth, and the growth rate of cloud business revenue is up to 40%. Although the proportion of cloud business revenue is still low, we judge that with the sustained and rapid growth of cloud business, the company's business structure will be further optimized and is expected to continue to improve profitability.
Accelerate the promotion of cloud computing MSP, continue to expand new products and layout around Xinchuang, is expected to open up a broad market space.
The company acquired Cloud Star data RightCloud, a multi-cloud management platform in 2020, and continuously enhanced its competitiveness in the field of cloud MSP by relying on its leading channel capabilities, technical support capabilities and customer expansion capabilities, and deep integration with Cloud Star data products and services. In 2020, the company continues to carry out strategic expansion, and newly signed partners include VEEAM, Sigfox, Xiaoyu Yi Lian, AsiaInfo Security and so on. In the field of Xinchuang, the project continues to advance with policy support, and the company cooperates deeply with mainstream domestic manufacturers such as Chaochao, Lenovo, Huawei, H3C, Jinshan, Ruijie, Dawn, Tongxin, etc., to accelerate the process of domestic substitution. In the first year of the 14th five-year Plan, the company is expected to continue to grow steadily under the strong signal of a scientific and technological power, independent control, digital transformation and other multiple catalysts.
Risk tips: the demand for traditional consumer electronics, accessories and other products is lower than expected; the development speed of cloud business is not as fast as expected; the progress of Xinchuang is not as expected; market competition intensifies.
Investment advice: the company is the leading IT distribution and service provider in the Asia-Pacific region with excellent performance in 2020.
The company's deep layout of cloud management service business is expected to continue to benefit and open up a broad market space under the big wave of digital transformation and domestic substitution. Adjust the 2021-2022 homing net profit forecast to HK $1.16 / 1.38 billion (HK $1.32 billion), and add HK $1.59 billion to the 2023 net profit forecast, corresponding to the EPS forecast of 0.95 pm (the original EPS forecast for 2021-2022 is RMB 0.77), maintaining the "buy" rating.