20220824-招银国际-广联达-002410.SZ-Penetrating_into_basic_infrastructure_segment_10页_1mb

Glodon (002410 CH) Summary

Core Content

Glodon (002410 CH) is a leading Chinese software and IT services company that has demonstrated strong financial performance and strategic growth in its FY2Q22 results. The company's focus on SaaS (Software as a Service) and its expansion into the basic infrastructure segment are key drivers of its growth. The report highlights the company's ability to outperform expectations and the positive outlook for future performance.

Main Points

• FY2Q22 Results: Glodon reported revenue of RMB1,640 million, a 23% YoY increase, and net profit of RMB288 million, a 38% YoY increase. The results beat the estimates by 5% and were in line with the consensus.
• SaaS Growth: Construction costing SaaS revenue grew by 28% YoY to RMB794 million, contributing 48% of total revenue. Newly signed contracts and contracted liabilities also showed strong growth, indicating a solid SaaS outlook.
• Construction Management: Revenue from construction management increased by 67% YoY to RMB393 million, with a significant portion of contracts related to basic infrastructure projects. The company maintains a full year growth target of 30% YoY for this segment.
• Financial Metrics: Glodon's operating margin reached a record high of 20.1% in FY2Q22, up 1.7% YoY. The company's gross margin was 85.6%, slightly lower than the estimate and consensus.
• Valuation: The target price was revised to RMB85.19, based on a 12x EV/sales multiple for FY23E, unchanged from previous estimates. The current price is RMB50.80, with a 12-month price performance chart provided.
• Auditor: BDO
• Shareholding Structure: Diao Zhizhong, the Chairman, holds 16.0%, while other co-founders hold 16.3%.
• Earnings Revision: The report notes a revision in earnings forecasts for FY22-24E, with a focus on SaaS migration and operating leverage.

Key Information

• Revenue Growth:
  • FY20: RMB4,005 million (13% YoY)
  • FY21: RMB5,619 million (40% YoY)
  • FY22E: RMB6,823 million (21% YoY)
  • FY23E: RMB8,029 million (18% YoY)
  • FY24E: RMB9,452 million (18% YoY)
• Net Profit Growth:
  • FY20: RMB330 million (34% YoY)
  • FY21: RMB661 million (99% YoY)
  • FY22E: RMB914 million (38% YoY)
  • FY23E: RMB1,143 million (25% YoY)
  • FY24E: RMB1,381 million (21% YoY)
• EPS Growth:
  • FY20: RMB0.28
  • FY21: RMB0.56
  • FY22E: RMB0.77
  • FY23E: RMB0.96
  • FY24E: RMB1.16
• PE and EV/sales:
  • FY20: PE 182.3, EV/sales 13.9
  • FY21: PE 91.4, EV/sales 10.0
  • FY22E: PE 66.2, EV/sales 8.3
  • FY23E: PE 52.9, EV/sales 6.9
  • FY24E: PE 43.8, EV/sales 5.8
• Dividend Yield: 0.00% for all years
• ROE:
  • FY20: 7%
  • FY21: 11%
  • FY22E: 15%
  • FY23E: 18%
  • FY24E: 18%
• Net Debt to Equity: Net cash for all years
• Market Capitalization: RMB59,751 million
• Average 3 Months Turnover: RMB256.31 million
• 52-Week High/Low: RMB75.49/RMB40.91
• Total Issued Shares: 1,191 million
• Stock Performance:
  • 1-month: -0.4% (Absolute), +1.6% (Relative)
  • 3-month: +2.6% (Absolute), +0.8% (Relative)
  • 6-month: -15.6% (Absolute), -5.8% (Relative)

Strategic Highlights

• Glodon is expanding into the basic infrastructure segment to reduce reliance on the property sector.
• The company is targeting a 20% YoY growth in construction costing revenue for FY22.
• FY22E construction management revenue is expected to grow by 30% YoY.
• The company's SaaS migration is expected to continue improving operating leverage and margins.

Earnings and Valuation

• The report revised FY22-24E earnings forecasts, reflecting the operating leverage from SaaS.
• The target price was maintained at RMB85.19, based on a 12x EV/sales multiple for FY23E.
• The company's EV/sales ratio is expected to continue declining, aligning with the three-year mean.

Operating Model

• The operating model shows increasing revenue and profit over the years, with SaaS playing a key role in growth.
• The company's SaaS revenue is expected to grow consistently, with a focus on migration and renewal rates.
• The construction management segment is showing a significant increase in revenue, driven by new projects and customer additions.

Financial Summary

• Income Statement:
  • Revenue: RMB4,005 million (FY20), RMB5,619 million (FY21), RMB6,823 million (FY22E), RMB8,029 million (FY23E), RMB9,452 million (FY24E)
  • Net Profit: RMB330 million (FY20), RMB661 million (FY21), RMB914 million (FY22E), RMB1,143 million (FY23E), RMB1,381 million (FY24E)
• Cash Flow:
  • Net cash from operating activities: RMB1,876 million (FY20), RMB1,601 million (FY21), RMB1,278 million (FY22E), RMB2,051 million (FY23E), RMB2,441 million (FY24E)
  • Net cash from investing activities: RMB-697 million (FY20), RMB-1,541 million (FY21), RMB-887 million (FY22E), RMB-812 million (FY23E), RMB-807 million (FY24E)
  • Net cash from financing activities: RMB1,400 million (FY20), RMB-795 million (FY21), RMB-658 million (FY22E), RMB-339 million (FY23E), RMB-353 million (FY24E)
• Balance Sheet:
  • Total assets: RMB9,547 million (FY20), RMB10,068 million (FY21), RMB10,388 million (FY22E), RMB11,785 million (FY23E), RMB13,508 million (FY24E)
  • Total liabilities: RMB2,989 million (FY20), RMB3,795 million (FY21), RMB3,857 million (FY22E), RMB4,349 million (FY23E), RMB4,930 million (FY24E)
  • Total equity: RMB6,558 million (FY20), RMB6,273 million (FY21), RMB6,531 million (FY22E), RMB7,435 million (FY23E), RMB8,578 million (FY24E)

Key Ratios

• Revenue Mix:
  • Engineering costing: 70% (FY20), 68% (FY21), 67% (FY22E), 67% (FY23E), 66% (FY24E)
  • SaaS: 41% (FY20), 46% (FY21), 50% (FY22E), 53% (FY23E), 54% (FY24E)
• Growth (YoY):
  • Revenues: 13%, 40%, 21%, 18%, 18%
  • Gross Profit: 12%, 33%, 19%, 17%, 16%
  • Operating Income: 9%, 113%, 28%, 10%, 17%
  • EPS: 34%, 99%, 38%, 25%, 21%
• Margins:
  • Gross margin: 88.7% (FY20), 84.1% (FY21), 82.5% (FY22E), 81.8% (FY23E), 80.4% (FY24E)
  • Operating margin: 10.2% (FY20), 13.3% (FY21), 15.9% (FY22E), 16.7% (FY23E), 16.6% (FY24E)
  • Net margin: 8.3% (FY20), 11.8% (FY21), 13.4% (FY22E), 14.2% (FY23E), 14.6% (FY24E)

Conclusion

Glodon continues to show strong growth and performance, particularly in the SaaS segment. The company's expansion into the basic infrastructure segment is expected to provide stability and reduce fluctuations from the property sector. With a revised target price and a solid earnings forecast, the report maintains a "BUY" rating for Glodon.