(Report producer/analyst: Guosheng Securities, Liu Gaochang)
First, the OA industry pioneer, moving towards wide-area collaborative management
OA industry pioneer, 20 years of collaborative management.
1) Founded in 2002, Zhiyuan Internet has always focused on the field of enterprise-level management software, providing customers with collaborative management software products, solutions, collaborative management platforms and cloud services, integrating the design, research and development, sales and service of collaborative management products, and is a leading collaborative management software provider in China.
2) At present, the company has more than 50,000 enterprise and government customers, oriented by customer stratification and operation, and the operating results of head customers are remarkable, with a contract amount of more than one million yuan in 2022H1 and a project amount of 127.7104 million yuan, a year-on-year increase of 37.31%.
The company's business scope basically covers most of the country, customers cover manufacturing, construction, energy, finance, telecommunications, Internet and government agencies and many other industries and fields, at the same time, deepen the state-owned assets system customer operation, from basic office to state-owned characteristic business scenario series applications, become the domestic collaborative software market leader.
The shareholding structure is relatively scattered, the actual controller has a stable position and a deep technical background.
1) The actual controller of the company is Xu Shi, the founder, general manager and chairman of Zhiyuan Internet, holding 23.05% of the company's shares. Hu Shouyun (Director, Deputy General Manager) and Tao Weijie (Board Secretary, Deputy General Manager) hold 2.43% and 1.75% of the company's shares respectively, making them the 6th and 10th largest shareholders. In total, the management holds approximately 27.33% of the shares, with the remaining 72.67% dispersed. The founder Xu Shi has actual control and the shareholding structure is relatively stable, which is conducive to the implementation of long-term strategies.
2) Chairman Xu Shi has been engaged in system integration and industry management software research and development and sales for a long time, focusing on theoretical research and application innovation of collaborative management software; Hu Shouyun is involved in the design and development of collaborative application platform (CAP) and G6, G6-N, OCIP, etc. in the field of R&D technology, and the management has a technical background in enterprise management software research and development.
In the early stage, we borrowed the momentum of UF to quickly expand distribution channels and gain popularity.
1) According to the company's announcement, in the early stage of establishment, the company is a subsidiary of the company holding 30% of the shares of Yonyou Network, in the early stage of the establishment of the marketing network, the company with the help of the brand effect of Yonyou network, through independent participation in Yonyou network or the industry organization of the dealer conference and other ways to promote the company's products, independent development of the company's distributors, which has played a certain positive role in the expansion of the company's distribution channels.
2) Since 2008, with the continuous expansion of the market scale of collaborative management software, the company's products have gradually been widely recognized by users, the company began to establish its own direct sales channels independently, in Beijing, Shanghai, Guangzhou and other major cities in the country to establish direct sales network service organizations, gradually formed a "direct sales, supplemented by distribution" marketing channels, while the positive role of Yonyou network brand effect in the marketing of the company's products gradually disappeared. From 2015 to 2017, after a series of events such as the transfer of shares held by Yonyou Network and the introduction of new investors by the company, the shareholding ratio of Yonyou Network has been reduced to 4.3125%.
The original "dualized workflow" opens up the OA market with rigidity and flexibility.
1) In addition to leveraging the brand awareness and distributor channels of Yonyou Network in the early stage of its establishment, the company has always maintained independence in product technology, and the dualized workflow is the first fist product created by the issuer to open up the government and enterprise OA market.
2) The objects of process management include rigid processes and flexible processes, and rigid processes are more institutionalized and standardized administrative management links, such as reimbursement and procurement; Flexible processes are "non-standard processes" in enterprise operations, such as an ad hoc meeting and a sudden public opinion handling. In addition to meticulously sorting out the multi-hierarchical structure of large state-owned enterprises or groups, it meets the needs of rigid process processing in the form of traditional OA; For flexible processes, the company's products allow users to set their own rules according to permissions in a drag-and-drop manner, emphasizing human mobility in the process more than ordinary OA office software.
The dualized workflow "rigid and flexible" not only institutionalizes and standardizes enterprise management, but also meets agility and agility, helping the company to smoothly open the OA market.
The business is gradually moving from productization to platform and ecology, flexibly meeting the collaborative management needs of various customers.
1) In 2003, the collaborative management software A6 was released, creating a precedent for "standardized products" in the industry; In 2013, the V5 collaborative management platform was released to help Chinese organizations build an efficient and unified working platform. In 2017, CAP+/M+ was released, opening the business model of "standard products + customized applications + customized sharing"; In 2020, the system operation platform COP was officially released for the industry to build a new digital infrastructure. The company continues to move from productization to platformization, digitalization and ecology, and the market boundary of collaborative management is constantly extended.
2) As of 2021, the company has formed a relatively complete product system, and the standard products developed based on the collaborative management technology platform V5 include: A8 for medium and large and group enterprises, G6 for government organizations and institutions, and corresponding information and innovation products and mobile products; A6 and corresponding mobile products for SMBs/organizations.
Revenue and profit grew steadily, with A8 and G6 as the main support for the business.
1) From 2017 to 2021, under the influence of the phased epidemic, the compound growth rate of the company's total operating income reached about 21.89%, reflecting the good trend of business expansion. In 2022H1, the company achieved a total operating income of 423 million yuan, a year-on-year increase of 15.82%, considering that the company's revenue is seasonal, most of the revenue is concentrated in the second half of the year, and the revenue in 2022H2 is expected to further accelerate.
2) From 2017 to 2021, the compound growth rate of the company's net profit attributable to the parent is about 30.12%, maintaining a high growth rate. In 2022H1, the company achieved a net profit attributable to the parent of 34 million yuan, a year-on-year decrease of 24.77%, mainly due to the company's increase in market expansion and personnel recruitment in the previous year, and the increase in project delivery, sales and R&D personnel expenses in the current period.
3) From the perspective of business composition, collaborative management software products are the main source of revenue, accounting for about 89.05% of revenue in 2021; Among them, A8 products for medium-sized and large and group enterprises/organizations are the main support of the software business, accounting for about 69.07% of revenue in 2021.
The gross profit margin remained stable, and high R&D grasped the new trend of platform and cloudification.
1) From 2017 to 2022H1, the company's overall gross profit margin remained stable. In 2021, the gross profit margin of the company's main business was approximately 72.31%, down 4.78 percentage points from the same period of the previous year, mainly due to factors such as the increase in delivery costs due to the increase in contract customization content, the increase in the salary of delivery personnel, the increase in the cost of third-party products due to the increase in information and innovation projects with integrated content, and strategic projects with low gross margin.
2) In terms of expense ratio, the company's overall expense ratio has shown a contraction trend, and the proportion of sales, management and R&D expenses to revenue decreased from 73.48% in 2017 to 64.2% in 2021. Among them, the R&D expense rate maintained a steady growth, in 2021, the company's R&D investment accounted for 17.56% of operating income, an increase of 1.89 percentage points over the same period of the previous year, mainly because the company continued to increase R&D investment in the optimization and upgrading of the existing V5 platform and the research and development of cloud business, which comprehensively improved the performance of the V5 collaborative management technology platform. At the same time, the company continues to increase R&D investment in the new generation of collaborative management technology Ping V8.
Equity incentives bind core employees, and performance targets highlight development confidence.
On April 27, 2022, the Company released a restricted stock incentive plan (draft), the total number of incentive recipients granted for the first time under the incentive plan is 267, accounting for about 10.71% of the total number of employees of the Company of 2,494 (as of December 31, 2021), mainly executives of the Company.
2) The incentive plan takes the three fiscal quarters of 2022-2024 as the assessment year, and takes the average operating income and net profit of the company in the two years from 2020 to 2021 as the performance base, and sets revenue and profit growth targets.
The inflection point of 2022Q2 expense growth has appeared, and the profit scissors difference may appear.
1) In 2020, due to the impact of the epidemic, the recruitment process of computer company personnel was delayed and released in 2021, resulting in profit release lagging behind revenue growth. As of the end of 2021, the company's total number of employees was 2494, a year-on-year increase of 36.06%. Among them, there were 576 R&D personnel, a year-on-year increase of 32.72%; There were 861 technicians, a year-on-year increase of 128.38%.
2) In 2022Q2, the growth rate of the company's expenses slowed down significantly, of which sales expenses decreased by 7.34% year-on-year, management expenses increased by 3.87% year-on-year, and research and development expenses increased by 26.54% year-on-year. At the same time, from the perspective of personnel, as of the end of June 2022, the company's R&D personnel were 595, an increase of only 19 compared with the end of 2021, and the growth rate of personnel slowed down significantly.
Second, the boundary of collaborative management continues to extend, and leading manufacturers are expected to enjoy industry concentration
2.1 Management software has moved from process approval to organizational collaboration, and the market size has reached the level of tens of billions
Mail could not adapt to the management characteristics of domestic enterprises, and automated office OA came into being.
1) Drawing on the management experience of European and American enterprises, communication tools such as mail were also used as important tools for mainland enterprise management twenty years ago. Unlike the relatively flat and open organizational structure of European and American enterprises, the mainland is represented by large state-owned enterprises and groups with many levels, nodes and complex chains, and the relationship between multiple departments restricts each other and is intertwined. Such complex requirements cannot be solved by an email without process management and node control.
2) As a result, OA products with administrative office as the application scenario came into being, and their value mainly lies in the ability to quickly process the processes and documents involved in administrative offices, so that information within the organization can be shared and circulated under certain authority control. After years of development, the pattern of OA leading companies such as Panwei, Zhiyuan, and Lanling has been set.
1) Around 2000, a number of domestic office automation manufacturers were established one after another, mainly including Panwei Network, Zhiyuan Internet, Lanling Software, etc.
2) According to the statistics of China Software Industry Association, as of 2018, there are nearly 500 domestic collaborative management software manufacturers, including more than 40 of their own brands, and manufacturers such as Panwei, Zhiyuan, Huatian Power, and Lanling occupy a dominant position in the market.
The traditional OA boundary is obvious, and the management software moves from process approval to organizational collaboration.
1) Traditional OA mainly solves solidified administrative office applications such as official document circulation. Obviously, if it is only process approval, it cannot meet the complex "synergistic" relationship between people. As a result, collaborative management software evolves from traditional OA. It mainly solves the information application of enterprises in the fields of information portal, work process, knowledge document, communication and assistance, so that the information within the organization can be fully shared and effectively circulated under the control of certain authority, so that the members of the organization can operate more efficiently and collaboratively.
2) The difference between the two is reflected in the fact that collaborative management software is aimed at the collaborative management of the entire enterprise, and the collaboration covers all resource elements of the enterprise such as organization, system process, knowledge documents, personnel, information, customers, etc., and supports integration with ERP and various third-party business software; Traditional OA, on the other hand, targets administrative office applications; We will only handle processes, documents, etc. involved in administrative offices.
Case 1: "Business Generator" effectively controls the cost and benefit of sales activities by penetrating data.
1) According to Koshi Lightyear, even though the OA more than 10 years ago was able to define the sales process and monitor the implementation through forms, a fundamental question remained unsolved: how to calculate the cost and benefit of sales activities? For example, COFCO Group implemented discounts for Carrefour or Wal-Mart distributors, how to timely understand the impact of a 2 yuan reduction in unit price on total revenue.
2) In the past, when office software was still in the stage of document approval and process management, the business was cut into multiple modules separated from each other. For example, in a sales scenario, forms such as purchase approval, inbound approval, sales contract approval, and outbound approval are independent of each other, and decision makers can only calculate costs and benefits by manually extracting data from these separate forms.
3) In 2012, Zhiyuan Internet launched "Business Generator" as a new tool, through the association of forms, so that the form data penetrates and connects with each other, and is uniformly stored in the underlying data warehouse. With the help of the business generator, operators can log in to the background system at any time, find the local daily business guidance price, and quickly calculate the profit margin, marginal contribution rate and other important indicators of sub-category goods.
Case 2: Facilitate data compliance of prospective IPO enterprises and effectively correlate revenue with project progress.
1) The number of IPO companies has gradually increased in recent years, according to Wind data, the number of IPO listed companies on the Shanghai Stock Exchange reached 249 in 2021, an increase of 6.41% compared with 2020 and an increase of 102.44% compared with 2019. Related party transactions, major transactions, confirmation of income rights and risk management have become necessary issues for quasi-listed enterprises.
2) Under the strict accrual system, the income of each project transaction must meet the quality requirements of the business walk-through test, and must have product receipt, delivery acceptance report, completion report, etc. Indicators such as cash flow, receivables, net expenditure, and net inflow need to ensure authenticity and compliance, so as to achieve the digital capability of closed-loop business and closed-loop data.
However, systems such as traditional ERP do not manage project acceptance separately, and users cannot associate revenue with project progress. Although the back-office system entered revenue one by one, from the perspective of listing compliance review, such financial data was not linked to the project and the evidence chain was missing.
3) At that time, the low-code platform of Zhiyuan Internet separately encapsulated the business scenarios of data compliance required by prospective IPO enterprises:
Connect with the customer's original HR system, sort out the organizational structure, clarify the responsibility of project data to the person, and make the progress accountable and predictable; Connected to ERP and other systems, the data structure has been reorganized, and business processes have been added to link the data to the project schedule.
Case 3: Digital mobile store patrol is launched, timely collection of store operation data, and effective feedback through the data middle office.
According to Panwei Network report, in August 2021, Panwei assisted Urban Beauty to build a digital and mobile store patrol application, which can collect effective data in the process of store operation in a timely manner and give feedback.
1) Store data synchronization: By docking with the customer data middle platform, the store data is correspondingly obtained into the OA system, and the store status is updated in real time, which is convenient for querying and reduces the workload of manual update.
2) New store patrol plan: In order to ensure permission control, applicants can only initiate store patrols for the stores they are responsible for, and can initiate multiple store patrol plans at a time.
3) Store visit plan change: The store patrol person can cancel or change the store tour plan that he has not started in the system. Supports modifying multiple strips at once.
4) Store patrol address control: When the store inspector starts to patrol the store, it will determine whether the store has the requirement to control the check-in address, the system compares the coordinates of the store according to the current geographical coordinates of the store patroller, if the distance from the store exceeds the allowable radius, it will be prompted, otherwise it will enter the scoring page.
Combined with the above cases, we believe that domestic mainstream management software, from simple bookkeeping software to traditional ERP, has produced great value in how to calculate the accounts clearly and how to control the production and manufacturing links. At present, with the rapid progress of production technology and interaction methods, a variety of business scenarios continue to emerge with market changes, and the organization, as the main body of production activities, its internal and external collaboration has also become an important topic of operation management, and the boundary of collaborative management is constantly extended.
Taking Zhiyuan collaborative operation platform COP as an example, it is an integrated operation platform that integrates various entrances such as WeChat, DingTalk, and Feishu to open up front-end scenarios, and at the same time, seamlessly connects with customers' existing business support systems such as business applications, domain applications and industry applications. A comprehensive platform for permission control and user management. In today's increasingly urgent digital transformation of government and enterprises, its value is expected to continue to play a role.
As the demands of digital transformation continue to unleash, non-OA systems have become a major driver of the collaborative management market. With the advancement of the digital transformation process of government and enterprises, the traditional OA system that only meets the needs of administrative and process approval is far from meeting the current needs of production and operation.
According to the company's announcement, in 2021, among the direct sales revenue, OA (collaborative office) and non-OA (collaborative business and collaborative operation) revenue were 187.3106 million yuan and 473.9175 million yuan respectively, accounting for 28.33% and 71.67% respectively; In 2022H1, OA (collaborative office) and non-OA (collaborative business and collaborative operation) revenue in direct sales revenue were 70.6184 million yuan and 218.2606 million yuan, accounting for 24.45% and 75.55% respectively.
We expect that the market size of collaborative management software has reached the level of 10 billion, and the compound growth rate is expected to maintain 15-20% in the future.
1) According to the company's prospectus, from 2016 to 2018, the market size of mainland collaborative management software was 6.260 billion yuan, 7.250 billion yuan and 8.180 billion yuan respectively, a year-on-year increase of 12.20%, 14.20% and 14.40%.
2) Assuming a compound growth rate of about 15% from 2018 to 2021, we expect the market size to reach about 12.44 billion yuan in 2022. At the same time, considering the accelerated release of organizational collaboration needs and the continuous advancement of enterprise digital transformation in recent years, we expect that the compound growth rate of the collaborative management software market is expected to remain in the range of 15-20% in the future.
2.2 The competition pattern of the three types of manufacturers is becoming clearer, and cloudification and information innovation are expected to promote industry concentration
The competition pattern of the three types of manufacturers has basically formed, and professional manufacturers may have more value-added space.
1) With the gradual increase in demand for collaborative management software, more and more information technology manufacturers have begun to participate in market competition. In addition to the highly specialized collaborative management software manufacturers in the collaborative management software market, it also includes some large system integrators and independent software developers and some Internet enterprises, basically forming a competitive pattern including professional collaborative management software manufacturers, system integrators and independent software developers and some Internet vendors.
2) Comprehensively evaluating the main characteristics of each manufacturer, we believe that professional collaborative software manufacturers represented by Panwei, Zhiyuan, Lanling, etc., on the one hand, have comprehensive product functions and a solid customer base, which can quickly grasp the trend of new products and grasp the pain points and needs of high-value users; On the other hand, through business outsourcing, ISV and other cooperation means, we can maintain a high degree of product standardization, take into account the reproducibility of solutions, or have greater value-added space.
According to estimates, the total market share of leading professional manufacturers is about 30%, of which companies account for about 8.29%. Based on the market size of collaborative management software and the revenue data of various manufacturers, we estimate that as of 2021, the market shares of leading professional manufacturers such as Panwei Network, Zhiyuan Internet and Lanling Software are 16.10%, 8.29% and 4.28%, respectively, a total of about 28.67%.
In terms of pattern, we believe that under the promotion of cloudification and information innovation, industry concentration is expected to further increase, and leading manufacturers may enjoy higher growth rate and more space.
1. Cloud transformation is an important strategy to achieve collaboration, which is inherently Matthew effect
There are many and expanding enterprise management system modules, and it is difficult for the traditional underlying architecture to effectively support. With the development of the Internet and other technologies, the penetration of enterprise management information has gradually deepened, and the scale and types of management business have been continuously expanded.
However, the traditional IT underlying architecture cannot effectively and flexibly support the expansion of business systems, and new systems or modules need to be connected to the original system in the form of patches, showing defects such as long implementation cycle, low operating efficiency, slow response, and poor coordination. At the same time, traditional IT systems have barriers in data integration and data management efficiency is low. Traditional IT systems mostly adopt a "chimney" architecture that runs vertically from top to bottom, and the correlation between multiple system modules is limited.
In the case of CRM, for example, to improve profits, companies need large amounts of data and granular labels to help them tap into new revenue streams. On-premises and legacy systems have certain data barriers in terms of data aggregation, so in this process, the migration of systems to the cloud is crucial for enterprises. Cloud technology has outstanding advantages such as high flexibility, strong collaboration, and more convenient data management, and cloud migration has become an important strategy for enterprise collaborative management.
1) The popularity of cloud computing has gradually penetrated into various industries and has become an important part of digital transformation.
By assuming a unified data, technology and business platform at the bottom layer, organizational business can achieve cross-regional, cross-brand and cross-format flows, and cloud transformation has become an important strategy for enterprise collaborative management.
2) According to IDC statistics, cloud computing, as the best choice for current enterprise IT infrastructure technology, has gone through the stage of exploration and practice and ushered in a period of diversified and comprehensive development.
According to IDC statistics, in 2019, China's overall cloud computing market, including cloud services (cloud as a service: public and dedicated cloud services), cloud-related services (cloud-related services: cloud professional services and cloud management services), cloud infrastructure construction (cloud infrastructure build: cloud infrastructure construction for enterprise users and service providers), reached 32.9 billion US dollars, which is expected The market will reach more than $100 billion by 2024.
Cloud computing has an inherent Matthew effect, mainly due to the accumulation of customer data and the grasp of long-tail customer groups.
First of all, in terms of customer base, SaaS subscriptions convert large one-time charges into lower annual fees in absolute terms, which helps attract long-tail customers.
Secondly, in terms of customer value-added, business data on the cloud helps the company to further tap user needs, through continuous business flow analysis and data analysis, the company will be able to continuously derive value-added services, strengthen the stickiness of old customers, and will also meet the more needs of new users.
According to the company's announcement, in 2021, in the direct sales transaction contract of Zhiyuan Internet, the amount of CAP (low-code platform) related contracts was 600.8813 million yuan, a year-on-year increase of 44.28%, of which the amount of new customer related contracts was 312.6714 million yuan, a year-on-year increase of 26.38%; The amount of related contracts for old customers was 288.2099 million yuan, a year-on-year increase of 70.47%.
2. The general trend of information and innovation, small and medium-sized manufacturers have adaptation problems
A new round of digital economy construction cycle has begun, and independent innovation of key technologies is imperative.
In August 2020, the Notice of the State Council on Issuing Several Policies to Promote the High-quality Development of the Integrated Circuit Industry and Software Industry in the New Era to further optimize the development environment of the integrated circuit industry and software industry and improve the industrial innovation ability and development quality;
In January 2022, the 14th Five-Year Plan for the Development of the Digital Economy mentioned that it is necessary to enhance key technological innovation capabilities, focus on improving the supply level of basic software and hardware, core electronic components, key basic materials and production equipment, and strengthen the self-sufficiency guarantee capacity of key products;
In December 2021, the Central Cyber Security and Informatization Commission issued the "14th Five-Year Plan for National Informatization", which pointed out that by 2025, the digital technology innovation system will be basically formed, the key core technological innovation capabilities will be significantly improved, the key technology research and development level of integrated circuits will be accelerated, the level of key software research and development will be improved, and the computer software and hardware ecology will be collaboratively optimized.
Xinchuang is expected to maintain rapid growth, with a compound growth rate of about 37.4% in the next five years.
According to the company's announcement, according to the 2021 China Information and Innovation Ecological Market Research Report by Haibi Research Institute, the actual scale of China's information and innovation ecological market will be 161.7 billion yuan in 2020, and its market development rate is about 4.4%; It is expected to maintain rapid growth in the next five years, with a compound annual growth rate of 37.4%, and will reach 800 billion yuan in 2025.
From the perspective of the market size of each segment in 2020, infrastructure (5G base stations, data storage centers, supercomputing centers) reached 71.8 billion yuan, followed by the underlying hardware (servers, complete machines, chips) category of 60.7 billion yuan, and enterprise applications (office software, industrial software, application software) category of 19.2 billion yuan.
Under ecological replacement, collaborative management software needs to be actively transformed and effectively adapted.
1) The development of domestic high-tech industry is the progress of the entire ecological level, not a single link, so from the underlying hardware, infrastructure, basic software, to the platform, enterprise applications, solutions and other levels, all need to be transformed accordingly, and the overall ecology is effectively adapted.
2) As a subcategory of the solution, collaborative management software also needs to adapt to the underlying basic software and hardware and other external application environments, and actively transform its own products to build an information and innovation industry ecology.
For example, in 2021, Zhiyuan Internet reached a strategic cooperation with Lanxin Mobile, Qianxin and Kirin Software to create an integrated multi-scenario solution; Panwei Network has carried out the "Intelligence, Collaboration, Information Innovation - Panwei Full Digital Office Experience Conference" in first-tier and second-tier provincial capitals across the country.
Small and medium-sized manufacturers represented by integrators and ISVs do not have sufficient conditions for investment in transformation and cooperation, and under the general trend of information and innovation, customer coverage and market share may be under pressure.
The growth rate of leading manufacturers continues to be higher than the industry average, and under the general trend of cloudification and information innovation, it is expected to further enjoy industry concentration.
From 2016 to 2021, the compound growth rate of Zhiyuan Internet total operating income is about 22.29% and the compound growth rate of Panwei Network's total operating income is about 34.15%, both of which are significantly higher than the industry average, which proves the general trend of industry concentration.
We expect that under the promotion of the general trend of cloudification and information innovation, the collaborative management software market will further concentrate on the head, and the leading companies are expected to continue to enjoy the industry dividend.
Third, low-code, cloud, information innovation, and channels work together to continue to move towards platform and ecology
1. The complexity of collaborative management is improved, and low-code supports the rapid expansion of business
Giving enterprises the flexibility to scale, by 2023, it is expected that 40% of new applications will be based on low/no-code platforms.
1) According to the Information Age, the biggest value of low-code platforms for enterprises lies in change. This change is due to the fact that the low-code platform gives enterprises the ability to flexibly scale, based on which enterprises can adapt in real time as the business changes; At the same time, the basic personnel without coding are quick to get started, and can quickly develop business applications at a very low cost to adapt to the rapid and changing business needs of enterprises.
2) According to IDC, by 2023, 40% of new applications will be developed on no-code/low-code platforms; As of the beginning of 2022, the percentage is 15%.
In 2012, the CAP business customization platform was launched, which has been polished for many years to achieve maturity and ease of use and industry-leading. According to the company's official WeChat public account, the company proposed a CAP business customization platform with low-code features in 2012.
Through continuous iteration and improvement, the platform now has both drag-and-drop configuration methods and open application interfaces, and provides rich resources and diverse components to help zero-based developers quickly implement application design around enterprise business scenarios, eliminating the problem of information islands between applications.
For large organizations: large organizations have a good information foundation, many systems, pain points are often system fragmentation, complex organization management, and many business scenarios that cannot be covered by professional systems, through CAP, you can build department-level/unit-level/project-type applications on demand, and a platform covers fragmented application scenarios, quickly apply management requirements, adjust on demand, and innovate rapidly.
For medium-sized organizations: medium-sized organizations have development, organization and business change rapidly, traditional software models can not meet the rapid growth needs of enterprises, application supply capacity can not keep up with changes in business needs, through CAP can quickly build exclusive applications that meet business needs, support the expansion of building block overlay applications with demand, adapt to organizational changes from simple to complex.
For small and micro organizations: Small and micro organizations have limited investment in digital construction, but the needs are real, and the solidified packaged software or standard SaaS software often does not match the needs of the enterprise. With CAP, you can build the personnel, contract, expense control and other business management required by the enterprise, and one platform can meet the needs and can be completed without developers, which is very cost-effective.
The customer utilization rate has reached more than 85%, and the enthusiasm of old customers to repurchase is high.
1) According to Xinhuanet, as of the end of September 2022, the utilization rate of low-code customers of Zhiyuan Internet has reached more than 85%, and has achieved multi-industry and field coverage.
2) According to the company's announcement, in 2021, in the company's direct sales transaction contracts, the amount of low-code platform CAP related contracts was about 601 million yuan, a year-on-year increase of 44.28%, of which the amount of new customer related contracts was 313 million yuan, a year-on-year increase of 26.38%; The amount of related contracts for old customers was 288 million yuan, a year-on-year increase of 70.47%.
In 2022H1, based on a unified technology platform, building efficient and low-cost business applications brings growth momentum to old customers' repurchase, and in the direct sales transaction contract, the CAP (low-code platform) related contract amount was 249 million yuan, a year-on-year increase of 7.8%, of which the amount of old customer related contracts was 126 million yuan, a year-on-year increase of 61.87%.
We believe that the low-code CAP platform will become an important tool for the company to quickly enrich its products, improve customer satisfaction, and seize the development trend of collaborative management, which is expected to continue to drive the company's growth in the future.
2. Products, technologies, and ecosystems have been comprehensively upgraded, and the cloud platform V8 is expected to become a new driver of growth
Firmly promote cloud transformation, and the compound growth rate of cloud revenue has reached 139.68% in the past three years.
1) Cloud transformation is one of the important strategies of the company's "73 Plan", aiming to provide customers with a new generation of cloud services, and currently has a new generation of collaborative cloud platform, digital intelligence human cloud cloud, data collection cloud, collaborative government cloud and marketing service cloud, based on public cloud and dedicated cloud to provide enterprise and government customers with business, data and connection and other polymorphic integration of cloud services.
2) In 2021, the company's cloud transformation strategy will be gradually promoted, and the cloud business revenue will be 105.2196 million yuan, a year-on-year increase of 123.16%; In 2022H1, the cloud service business further increased, achieving revenue of 41.4533 million yuan, a year-on-year increase of 85.64%. From 2019 to 2021, the compound growth rate of the company's cloud revenue is about 139.68%.
Firmly invested in research and development, the cloud platform has undergone several transformations.
1) From the perspective of the company's collaborative service advanced route, its support platform has undergone three major product technology iterations, the first stage is to rely on the V5 collaborative platform to create a solid product foundation, so that standardized products promote the application and popularization of collaborative management; The second stage is the collaborative cloud service platform, which moves the design and services to the cloud, connects many customers' private clouds and public clouds, and realizes large-scale and personalized collaborative application customization; The representative product of the third phase, the next-generation collaborative operation platform V8.
2) According to the company's announcement, in 2020, the company launched the research and development of a new generation of collaborative management technology platform V8, which adopts cloud native, microservice architecture and other technologies to meet the digital transformation needs of medium-sized and large-scale and group enterprises, supports the dedicated cloud deployment of large organizations and supports the business model of SaaS online subscription for small and medium-sized organizations.
The four major levels have been comprehensively upgraded to build a perfect collaboration system of "digital + intelligence" for enterprises.
Based on the middle office strategy, Zhiyuan Interconnection new generation of intelligent collaborative operation platform is committed to building and improving the collaborative operation system of "digital + intelligence" for enterprises, based on the organizational model, connecting various tasks and businesses, aggregating information, resources and capabilities, realizing efficient collaboration within and across organizations, and extending to the ecological participatory platform between enterprises and external partners, enterprises and the public, combined with social light collaboration to improve the application experience of all employees, thereby supporting the efficient implementation of enterprise strategies, Ensure the agility of enterprise innovation and change and the orderly management of operations.
Accelerate the completion of platform validation and maturity, including the maturity of technology platforms, business middle office, data and AI middle office, integration middle office, mobile and unified portal, including but not limited to: BPM business process refinement and performance analysis capabilities; Out-of-the-box business integration plugins; Chinese-style reports and out-of-the-box business analysis models in the data middle office;
Complete the introduction and integration of AI capabilities
Continue to enhance low-code platform capabilities, improve multi-level customization capabilities and their full links, improve page designers, especially mobile capabilities, enrich business components/office components, enhance the integration with middle office capabilities, and support the construction of different types and complexity of business applications.
Provide a wealth of out-of-the-box collaborative operation management applications, including clerical applications for state-owned central enterprises, integration with mobile platforms and IM capabilities, featured team light collaboration applications, and shared applications for large organizations, such as expense control reimbursement, contract sharing services, project management, etc. Extending from "internal management" to "external business", it provides IOT and internal and external collaboration applications for upstream and downstream, massive external personnel and devices.
Improve the "platform + application + operation" model, complete the development and official launch of SaaS, iPaaS, aPaaS platforms, support the dedicated cloud deployment of large organizations and support the online subscription of small and medium-sized organizations through operation, ecology and subscription models, and support the upgrading of the company's business model.
The COP competition has been held for 12 consecutive years, and the ecological construction has been promoted in an orderly manner.
1) In terms of influence, since 2012, Zhiyuan Internet began to launch the national collaborative application competition, which has been held for 12 consecutive times. Based on the form of "platform + low-code", the competition is customer-oriented and operation-oriented, realizing the efficient expansion of business capabilities and helping enterprises improve efficiency and reduce costs.
2) From the perspective of ecological partners, in January 2022, the company signed a marketing ecological cooperation agreement with Sai Yi Information, and the two parties will work together to create integrated, diversified and scenario-based solutions based on the technology, market, brand, ecology and resource advantages accumulated in the field of enterprise-level services, helping enterprises efficiently realize digital and intelligent transformation and upgrading, and initially opening the door to ecological construction.
V8 has entered the prototype customer verification period, and the early investment results are showing results and are expected to become a new performance growth point.
1) According to the company's announcement, as of 2022H1, V8 has entered the prototype customer verification period, and a number of large organizations have participated in prototype verification, verifying demand analysis, business design, product design and interactive experience in a variety of practical application scenarios, etc., to achieve rapid iterative improvement of the platform and products.
2) We expect that with the introduction of V8, the company's ability to serve large customers and the average unit price of sales may be improved.
3. Actively promote the adaptation of information and innovation, and rapidly penetrate the party and government and industry fields
Actively launch information and innovation products and continue to increase ecological adaptation.
1) In 2019, the company released the collaborative office product G6-N in the field of government affairs; In 2020, the industry information and innovation product A8-N was released, which can provide perfect collaborative management solutions to party and government and industry information and innovation customers. In 2021, the company continued to upgrade the underlying platform V8.0 to accelerate the iteration of Xinchuang products.
2) At the same time, in terms of ecological adaptation, the company continues to accelerate the pace of compatibility and mutual recognition with manufacturers in the industry, adapts new products with a number of software and hardware infrastructure manufacturers, and signs strategic cooperation agreements with important enterprises in the industry such as Feiteng.
The product has been fully adapted to the information and innovation environment, and has a variety of combination information and innovation environment tuning capabilities. According to the company's official website, G6-N can fully support the adaptation of mainstream information and innovation basic software and hardware, and provide any combination of information and innovation environment service support and deployment solutions.
Order income has grown rapidly, and the party and government and the industry have gradually made efforts.
1) In terms of revenue, from 2019 to 2022H1, the year-on-year growth rate of the company's information and innovation business revenue has always remained above 100%, and the revenue will be 120 million yuan in 2021, a year-on-year increase of 149.49%; In 2022H1, the revenue reached 70 million yuan, a year-on-year increase of 358.68%.
2) In terms of contracts, among the direct sales contracts, the contract amount of information and innovation in 2019-2021 continued to more than double, and in 2021, the contract amount of information and innovation business reached 229 million yuan, a year-on-year increase of 103.37%.
2) In terms of structure, in 2020, the party, government, information and innovation grew rapidly, achieving a contract amount of 100 million yuan, a year-on-year increase of 545.14%; In 2021, the industry information and innovation volume will increase rapidly, achieving a contract amount of 92 million yuan, a year-on-year increase of 631.41%.
4. Focus on high-value users and continue to strengthen regional layout
In terms of sales, the company strengthens customer stratification and focuses on high-value customers.
1) The company actively responds to changes in customer needs, and is guided by customer hierarchical operation, and is refined by industry, scale and demand. First of all, the company continues to promote the high-value operation of head customers and the online standardized operation of medium-sized customers; Secondly, the company actively promotes the replication of the industry and accurately focuses on "specialization and innovation".
2) According to the company's announcement, in 2022H1, under multiple external uncertainties, the company's head customers have achieved remarkable operating results, with a contract amount of more than one million yuan and a project amount of 127.7104 million yuan, a year-on-year increase of 37.31%.
In terms of channels, the company has increased its regional layout to improve the response speed of localization services.
In 2022H1, the company has 8 new layout business areas, 7 industry operation organizations, 11 urban franchised companies, and 83 new development business partners; Continuously strengthen the support and empowerment of business partners, promote the layout of business partners and the professional ability of the partner's exclusive management team, and have passed the company's professional certification of nearly 1,500 partner practitioners, more than 200 consulting and implementation delivery partners through their professional services around the Zhiyuan cloud marketing service platform to provide customers with services, realize ecological services online, establish a win-win mechanism, and integrate products, resources and services of all parties.
In summary, we believe that:
The boundaries of enterprise collaborative management continue to extend, and the low-code platform enables the company to quickly and effectively meet the diverse needs of customers and accelerate product iteration.
At the same time, the cloud platform V8 and Xinchuang version products conform to the general trend of software, and the early investment has gradually produced effectiveness to further support business expansion;
Finally, by strengthening hierarchical operation and regional layout, the company will quickly promote competitive products and platforms to customers and ecological partners, and realize the effective transformation from investment to performance.
4. Profit forecast and valuation
1. Operating income has grown steadily, the external environment has gradually stabilized, and V8 is expected to accelerate after its launch.
It is expected that the year-on-year growth rates from 2022 to 2024 will be 25.56%, 32.83% and 29.43% respectively. The company's main source of revenue is collaborative management software, which:
The A8 series is aimed at leading enterprise customers, and we expect their IT expenditure to be relatively rigid, and when the uncertainty of the external environment intensifies, they can pay more attention to "cultivating internal strength" and gradually accelerate their investment in collaborative management and information innovation. Its revenue growth rates from 2022 to 2024 are expected to be 28%, 35%, and 30%, respectively.
The G6 series is mainly for government customers, and we expect its IT expenditure to be relatively stable, and its revenue can gradually accelerate in the follow-up or with the gradual stabilization of the epidemic and the advancement of party, government information and innovation, and its revenue growth rate from 2022 to 2024 is expected to be 23%, 30%, and 30% respectively.
The A6 series is mainly for small and medium-sized enterprise customers, under macroeconomic pressure, the ability to withstand pressure may be weak, and the year-on-year revenue growth rate from 2022 to 2024 is expected to be -10%, 25%, and 30%, respectively.
2. Under multiple factors such as new products, major customers, and information innovation, the gross profit margin is generally stable, and the low-code platform is expected to provide effective support. The estimated operating cost ratios from 2022 to 2024 are 30.98%, 31.84%, and 32.30% respectively.
3. On the expense side, the results of the early investment are gradually appearing, and under the uncertainty of the external environment, it is expected that the overall cost rate will shrink this year.
In 2022Q2, the growth rate of the company's expenses slowed down significantly, of which sales expenses decreased by 7.34% year-on-year, management expenses increased by 3.87% year-on-year, and research and development expenses increased by 26.54% year-on-year.
In summary, we expect that from 2022 to 2024, the company's total operating income will be 12.95, 17.20 and 2.226 billion yuan respectively, with year-on-year growth rates of 25.6%, 32.8% and 29.4% respectively; The net profit attributable to the parent was 1.55, 2.09 and 274 million yuan respectively, with year-on-year growth rates of 20.5%, 34.7% and 30.9% respectively.
Risk Warning
The promotion of the new generation of collaborative cloud platform has not been as expected. V8 is a new generation of important products for the company to optimize product performance, expand customer needs, and accelerate output efficiency, and if it is not promoted as expected, it may have a certain impact on the business.
Risk of personnel fluctuations. Software is a manpower and technology-intensive industry, personnel is an important productivity, if the company has a large loss of personnel, personnel continue to expand significantly, etc., or have a certain impact on the company's performance.
Risk of increased competition. The boundaries of the collaborative management software market are constantly expanding, and if the number of participants increases rapidly, it may have a certain impact on the company's business development.
Policy progress has not been as expected. Information and other related policies are one of the important factors for party and government and industry customers to invest in IT, and if the progress is not as expected, it may have a certain impact on the company's business.
Macroeconomic risks. If the uncertainty of the external environment continues to intensify, or affect the IT spending plans of government and corporate customers, it will have a certain impact on the company's business development.
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Selected reports from [Vision Think Tank]