Pen intelligent interactive business has increased rapidly, and overseas markets have opened up.
According to the company's annual report, the operating income in 2020 was 1.555 billion yuan, an increase of 40.80% over the same period last year, and the net profit was 104 million yuan, an increase of 177.80% over the same period last year. Due to the lower-than-expected development of portrait recognition and intelligent terminal business, the overall performance was lower than expected (we expected a net profit of 144 million yuan in 2020). 20Q4's single-quarter operating income was 570 million yuan, an increase of 18.24% over the same period last year, and its net profit was 34 million yuan, an increase of 241.15% over the same period last year. We believe that the product layout of the company's digital painting business is constantly improving, the overseas marketing network is becoming more and more mature, and the performance may continue to grow. It is estimated that the EPS for 2021-2023 will be 1.03 pounds 1.43 yuan respectively, maintaining the "buy" rating.
The rapid development of pen intelligent interactive business provides an important driving force for the company's growth. In 2020, the company's intelligent interactive business revenue was 1.112 billion yuan, an increase of 107.12% over the same period last year, with a gross profit margin of 58.71%, an increase of 18.08pct over the same period last year. This is mainly due to the introduction of professional products with higher gross profit margin and the increase in the proportion of overseas market revenue with higher gross profit margin. Pen intelligent interactive business continues the trend of rapid development, with revenue of 94.26% CAGR from 2018 to 2020, which is an important driving force for the company's growth. In 2020, the company actively promotes digital painting products and has product layouts in different fields.
The professional painting brand xencelabs is launched in the professional market, and the XP-PEN brand series products are introduced into China in the consumer market. We believe that the company continues to improve the product layout, pen intelligent interactive business is expected to continue the trend of rapid growth, to provide growth momentum for the company.
The global marketing network is becoming more and more mature, further opening up overseas markets.
In 2020, the company's overseas revenue was 969 million yuan, an increase of 257% over the same period last year, accounting for 62.3% of total revenue, up from 7.7% in 2018. The company actively develops overseas markets, and the global marketing network is becoming more and more mature. Through cross-border e-commerce and overseas channels, digital painting products are sold worldwide through cross-border e-commerce platforms such as Amazon, e-Bay and 15 self-built stations. By the end of 2020, the company has set up 50 overseas warehouses in more than 20 countries, including 5 self-operated overseas warehouses, 20 third-party logistics companies and 25 sales platform cooperation models. We believe that with the gradual maturity of the company's global marketing network, overseas markets may be further opened.
Smart interactive business is growing rapidly, maintaining a "buy" rating
Due to the lower-than-expected development of AI smart terminal products, the operating income in 2021-2023 was reduced to 24.79 Universe 4.253 billion yuan (previous value: 27.73 3.491 billion Yuan in 21-22). Considering the rapid growth of intelligent interactive business with high gross profit margin, the company's overall profitability has been enhanced, and the net profit of 2021-2023 has been raised to RMB 2.51 million (former value: 2.03 / 307 million yuan for 21-22), and EPS is 1.03 pm 1.71 yuan (former value: 0.93 pm for 21-22). (previous value: 0.93 max 1.42 for 21-22), the company's overall profitability has been enhanced, and the net profit for 2021-2023 has been raised to 3.51 million yuan (previous value: 2.03 / 307 million for 21-22). Reference to 2021 comparable company Wind consensus expected PE average 23.3 times, given 2021 23.3 times PE, corresponding to the target price of 24.00 yuan (previous value 34.41 yuan), maintain the "buy" rating.
Risk hint: the demand for digital painting is lower than expected, and the advantage of pen touch control technology is weakened.