Event

The company achieved revenue of 970 million yuan in the first half of 2021, an increase of 45.2% over the same period last year, of which SaaS revenue accounted for 56.7%, an increase of 7% over the same period, and revenue increased by 65.5% over the same period last year. The gross profit was 774 million, an increase of 46.2% over the same period last year, and the gross profit margin was 79.8%. The company's adjusted net profit in the first half of the year was 190 million yuan, an increase of 32.7% over the same period last year.

Brief comment

First, what is the actual impact of real estate policy on Ming Yuan Cloud Group's revenue?

We believe that the actual impact of stricter real estate policies on Ming Yuan Cloud Group is relatively limited; 1) Ming Yuan Cloud Group products can help real estate developers to carry out fine management, improve sales and site management capacity; 2) there is no significant correlation between the growth rate of new construction area and Ming Yuan Cloud Group's overall income growth. 3) the proportion of large customers is low, and the problem of a single customer has a limited impact on the overall business.

Second, is the high growth of Yunke's income sustainable in the medium term? How much does the Arpu value increase visibility?

We believe that the growth of Yunke Arpu is expected to be realized in an orderly manner. 1) the increase of Arpu caused by channel sinking, that is, the decrease of collection and the increase of landing price; 2) the increase of the number of modules will increase the Arpu value of retained customers.

Third, the growth rate of cloud chain business is weak, can it be accelerated in the future?

We believe that cloud chain revenue is more likely to accelerate in the future. 1) the change of sales strategy leads to the decline of Arpu, but the possibility of further decline is low; 2) compared with the sales offices covered by cloud customers, the number of site coverage of the company still has at least 2 times the space; therefore, even without considering the improvement of arpu, cloud chain revenue can at least increase at the rate of quantitative growth, that is, there is a greater probability of future revenue acceleration.

4. The current time point has the valuation performance-to-price ratio, and the upward space objectively compares the valuation of American stock cloud companies. Companies with a general cloud revenue growth rate of 40% or more can give it to 25Xps. Considering that Ming Yuan Cloud Group's cloud income CAGR is 48.43% in 2018-2020, and the proportion of revenue has exceeded 50%, the overall valuation of 18XPS should be given. We expect the company to achieve revenue of 3.298 billion yuan in 2022, that is, the target market value is 59.4 billion yuan, which is 51% higher than the current price (using 11.10 closing price, HK $49 billion).

Risk hint: the progress of real estate sales is not as expected, and the progress of construction site is not as expected.