The performance was in line with expectations. The company released its 2021 quarterly report. Q1 achieved revenue of 1,567 billion yuan, an increase of 14.76% over the previous year; Guimu's net profit was 19.72 million yuan, an increase of 40.68% over the previous year; after deducting non-net profit of 14.57 million yuan, an increase of 49.73% over the previous year.

Cost and expense control is generally reasonable. 1) On the cost side, gross margin increased 1.41 pct year on year; 2) In terms of expenses, the cost rate for the period increased by 2.12 pct year on year. Among them, the sales expense ratio increased by 0.66 pct, and the management expense ratio including R&D expenses increased by 1.55 pct.

It was announced that the amount of new contracts signed had increased dramatically. Q1 The company's innovation and innovation business continued to gain strength, the new infrastructure business flourished, and the “cloud+digital+application+ecosystem” model advanced in depth and ushered in a good start. Referring to the announcement, during the reporting period, the company signed a total of 4,667 billion yuan of contracts, an increase of 358.87% over the previous year, and the amount of contracts to be signed was 1,070 million yuan. The net profit growth rate of Guimu was higher than the revenue growth rate. In addition to base factors, operating businesses such as cloud services and big data all achieved relatively rapid growth in Q1.

Investment advice: The 2021-2022 EPS is expected to be 0.87 yuan and 1.23 yuan respectively, maintaining the “Buy-A” rating.

Risk warning: market competition intensifies; policy progress falls short of expectations