Jinshan Office (688111) In-depth report: New journey of domestic office software

Jinshan Office (688111) In-depth report: New journey of domestic office software
Investment points: The industry scale is expanding rapidly, the terminal, advertising business welcomes dividends from 2010 to 2018, and the revenue of conventional software and information technology services industry from 2010 to 1.36 trillion to 6 in 2018.31 trillion yuan, with an annual compound intensity of 21.1%, its growth rate is significantly higher than GDP growth rate.The size of China’s basic office software market in 2018 was 85.34 ppm, a ten-year increase of 9.7%, it is expected that by 2023, the industry market size will reach 149.40,000 yuan, the composite polymer will reach 11 during 2018-2023.8%.From 2012 to 2018, the overall scale of the global smartphone industry has continued to grow, and the number of smartphone segments has increased from about 7 in 2012.2.3 billion units increased to 14 in 2018.5.0 billion units, with a composite intensity of 11 during the period.7%.In 2018, the size of China’s online advertising market reached 371.7 billion, an annual growth of 25.7%, with a compound capacity of 30 in the last 7 years.0%.  The 2B and 2C ends focus on the differences. Kingsoft Office is seizing the mobile Internet wave and is rapidly rising in the C-end market: In 2014, Kingsoft Office personal customers’ office service subscription revenue was less than the sum of institutional user subscriptions and software license income1.4%, the annual gap in 2018 has narrowed to 883.270,000, WPS personal office service subscriptions are also much higher than institutional users.Office’s revenue structure and user structure are exactly the opposite of Kingsoft Office. Since the second half of 2016, the revenue of Office Commercial and Office Consumer has basically remained at 6.At the 6: 1 level, the third fiscal quarter of fiscal year 2019 was terminated, and the number of monthly active users of Office 365Commercial was 1.800 million, Office 365 consumers have 34.2 million subscriptions during the same period, far from the former.  The license of 2B end has steadily increased, and the subscription of 2C end has become a new kinetic energy. The difference between the 2B end and the income of 2B end is reflected year by year: from 2014 to 2018, the difference between Jinshan office 2B end income and 2C end income was 1.15 ppm gradually drops to zero.7 billion, -0.4 billion, -1.3.4 billion and even -3.72 trillion, the scale continues to expand.In 2018, 2C-end revenue accounted for nearly 66 of total operating revenue for the year.48% is the company’s main revenue model.  Software licensing accounts for the home field, and institutional cloud subscription services will usher in leapfrog development. The 2B end is expected to surpass the 2C end and Microsoft’s revenue structure is converging: product licensing income mainly comes from governments and large enterprises, which were 2 in 2016 to 2018.3.5 billion, 2.8.4 billion and 3.5.6 billion, with a steady increase in revenue, accounting for 43 of the main business revenue.3%, 37.7% and 31.5%, showing a downward trend year by year.Value-added services for institutional customers were zero from 2016 to 2018.1.6 billion, 0.2.5 billion and 0.23 ppm, accounting for 24 of office service subscription revenue.7%, 14.6% and 5.8%, the proportion has fallen sharply in the past three years, and the current contribution to operating income has decreased.However, the sluggish growth of the 2B end may be transformed into the Jinshan office’s vigorous promotion of cloud subscription services and put an end to it, and it has made a difference in revenue structure with industry leader Microsoft.  Service upgrade + copyright consciousness enhancement, personal subscription revenue scale, will continue to maintain high growth in the short term: ARPU value of individual subscriptions from 21 in 2016.69 yuan increased to 24 in 2018.28 yuan.  WPS subscriptions have ARPU values from 26 in 2016.16 yuan increased to 53 in 2018.93 yuan.The number of monthly jobs has increased significantly from 77 in 2016.80,000 to 481 in 2018.170,000, with an average annual compound growth rate of 148.69%, accounting for 0% of all monthly active users.36% increased to 1.55%.  WPS member income was zero from 2016 to 天津夜网 2018.28 ppm, 0.82 ppm and 2.At 31 ppm, the annual compound strength is as high as 189%, which can be said to be rising rapidly.They accounted for 43% of WPS office service subscription revenue, respectively.3%, 47.2% and 58.9%, which shows that it is already in the office value-added service system.  The income of rice hull members was zero from 2016 to 2018.180,000 yuan, 0.51 ppm and 1.30,000 yuan, accounting for 27% of WPS office service subscription revenue.8%, 29.5% and 26.3%, relatively stable contribution to 2C-end business revenue.  Focus on the development and upgrade of software and supporting cloud services. The pace of artificial intelligence research and development and product internationalization is accelerating. Jinshan office building investment projects have four major directions, namely WPS Office office software development and upgrade, artificial intelligence basic research and development center construction in the office field, and office.The internationalization of product Internet cloud services and office software. The proportion of the total amount of funds to be invested in each direction is 31.22%, 16.35%, 31.27% and 21.16%.  Earnings forecast and investment rating We estimate the company’s operating income for 2019-2021 will be 15 respectively.7.9 billion, 21.3.7 billion, 28.USD 3.6 billion, with annual growth of 39.8%, 35.33%, 32.70%; net profit attributable to mothers is 4.3.7 billion, 6.5.0 billion, 8.14 ppm, corresponding EPS is 1.21 yuan, 1.68 yuan, 2.26 yuan.  Risk Warning: The growth rate of subscription services is slower than expected. Under the background of the economic downturn, Internet advertising revenue has increased, and AI has gradually fallen behind.