In 2020, the company's sales network was strengthened, and products for offline and enterprise customers grew rapidly. Investments and acquisitions were used to expand product categories, laying the foundation for future revenue growth. As the company increases investment in R&D and sales and accelerates investment in mergers and acquisitions, it is expected that the company's revenue will grow at an accelerated pace. Maintain an “increase in holdings” rating.

Matters: The company released its 2020 annual report. It achieved revenue of 510 million yuan in 2020, an increase of 9.75% over the previous year, of which SaaS product revenue was 358 million yuan, an increase of 11.89% over the previous year; the net profit of the mother was 93.6837 million yuan, a decrease of 2.79% over the previous year; and the net profit deducted by the mother was 43.3702 million yuan, a decrease of 38.11% over the previous year.

Overall performance was in line with expectations, and multi-platform expansion progressed rapidly. In 2020, the company's SaaS product revenue reached 388 million yuan, an increase of 11.89% over the previous year, an increase of 9.11% in the first half of the year. The multi-platform expansion of the company's SaaS products progressed smoothly. In 2020, courier assistant sales on the Pinduoduo platform increased 66.65% year on year, revenue increased 54.12% year on year, and in 2020, the company expanded various platforms such as Kuaishou and Douyin, showing rapid revenue growth.

Sales networks have been strengthened, and products for offline and enterprise customers are growing rapidly. In 2020, the company had 1,045 sales staff, an increase of 145% over the previous year. Direct sales teams were set up in more than 20 cities across the country, and the direct sales team system was initially completed. For major offline merchants, Kuaimai ERP's sales revenue increased 120.47% year on year in 2020, sales revenue increased 203.94% year on year, Kuaimai Design's sales revenue increased 104.37% year on year in 2020, and sales revenue increased 117.28% year on year. For a range of products aimed at DingTalk's enterprise-level customers, sales receipts increased 73.84% year on year in 2020, and sales revenue increased 156.89% year on year.

Invest in acquisitions to expand product categories and lay the foundation for future revenue growth. In September 2020, the AI customer service robot “Smart Dot”, a product of Beijing Smart Point Technology, was acquired and entered the e-commerce intelligent customer service field.

In November, an investment of 70 million yuan was used to purchase 11.6667% of the shares of Real Intelligence, entering the field of robotic process automation (RPA). In December, it strategically invested tens of millions of yuan in cross-border e-commerce ERP service provider Mabang ERP to increase its layout in the cross-border e-commerce SaaS field. In January 2021, Shenhui Intelligence was purchased at a price of 120 million yuan, adding products such as art robots and product data center (PIM). Through investment and acquisition, the company has gradually formed a pyramid customer structure and product matrix of start-ups, development merchants, mature merchants, and brand merchants. In the future, as the company's investment in mergers and acquisitions deepens, revenue growth is expected to accelerate.

Risk factors: The expansion of large customers and multiple platforms fell short of expectations, and investment in mergers and acquisitions fell short of expectations.

Investment suggestions: As the company increases investment in R&D and sales and accelerates investment and mergers and acquisitions, the company's revenue is expected to accelerate growth. The company's 2021-2022 revenue forecast is adjusted to 666/851 million yuan (original forecast of 665/826 million yuan), the 2023 revenue forecast is 1,063 million yuan, the 2021-2022 net profit forecast is 103/125 million yuan (the original forecast is 118/151 million yuan), and the 2023 net profit forecast is 172 million yuan. The corresponding EPS forecast is 0.26/0.31/0.43 yuan. The current price corresponds to the PE valuation 88/73/53 times, maintaining the “increase in holdings” rating.