20220330-招银国际-中国软件国际-00354.HK-Strong_demand_despite_near-term_margin_pressure_9页_1mb

报告摘要

Chinasoft (354 HK) Company Update Summary

Core Content Overview

Chinasoft (354 HK) reported strong revenue growth in FY21, reaching RMB18.4bn (+30% YoY), driven by robust performance in emerging cloud-related businesses (+63% YoY) and traditional IT outsourcing (+21% YoY). Despite the strong revenue, the company faced margin pressure, with a gross margin of 26.7% (-2.6 pct pts YoY), which fell below both CMB International Global Markets (CMBIGM) and consensus estimates. The decline in margins was attributed to strategic sacrifices for revenue growth with major clients, reduced social security provident fund in 2020, and increased investment in new businesses and technical staff.

The operating profit declined by 16% YoY to RMB796mn, while net profit remained in line with forecasts at RMB1,137mn (+19% YoY). The company's EPS was RMB0.36 in FY21, with a slight increase to RMB0.41 in FY22E. The firm expects continued strong demand in FY23E, reflected by a 21% YoY increase in employee numbers, which suggests rising IT service demand.

CMBIGM maintains a BUY rating for Chinasoft, with a revised target price of HK$10.52 (from HK$11.26), based on an unchanged 23x FY22E fully diluted EPS, aligning with peer averages.

Key Financial Highlights

Metric	FY20	FY21	FY22E	FY23E	FY24E
Revenue (RMB mn)	14,101	18,398	22,361	27,133	31,341
YoY Growth (%)	15%	30%	22%	21%	16%
Net Profit (RMB mn)	955	1,137	1,267	1,654	2,074
EPS (RMB)	0.32	0.36	0.40	0.52	0.66
YoY EPS Growth (%)	13%	13%	11%	32%	25%
P/E (x)	19.2	17.0	15.2	11.7	9.3
EV/Sales (x)	1.1	0.7	0.5	0.4	0.3

Key Drivers and Outlook

Strong Revenue Growth: Chinasoft continues to benefit from Huawei's software-centric transformation, which is expected to drive IT service demand in FY23E.
Employee Growth: A 21% YoY increase in employee numbers highlights the company's strong client demand and expansion.
Earnings Guidance: FY22E revenue is expected to grow by 23% YoY to RMB22.4bn, slightly above the consensus.
Margin Pressures: Net profit is revised downward by 2-7% for FY22E and FY23E to reflect lower margins, primarily due to the reasons mentioned earlier.

Valuation and Peer Comparison

Valuation: Chinasoft's 12-month forward P/E is 15.2x for FY22E and 11.7x for FY23E, aligning with peer averages.
Peer Comparison (Selected):

Company	Ticker	FY21E P/E	FY22E P/E	FY21E ROE	FY22E ROE	Sales CAGR FY20-23	EPS CAGR FY20-23
Chinasoft Digital China	354 HK	17.0	15.2	11.1	14.8	24%	18%
Infosys Tata Consultancy	INFO IN	41.6	35.7	28.4	38.0	16%	18%

Financial Summary

Operating Model: Chinasoft's revenue growth is driven by its cloud and traditional IT outsourcing businesses, with a notable shift towards cloud services.
Cash Flow: Net cash from operating activities was RMB1,298mn in FY21, and is expected to remain positive in FY22E at RMB1,957mn.
Balance Sheet: The company has a healthy cash position, with cash and equivalents increasing from RMB3,787mn in FY21 to RMB8,582mn in FY22E. Total liabilities are projected to rise from RMB5,276mn in FY21 to RMB7,101mn in FY22E.

Key Ratios

Ratio	FY20	FY21	FY22E	FY23E	FY24E
Gross Margin (%)	29.2%	26.7%	26.2%	26.7%	27.0%
Operating Margin (%)	6.7%	4.3%	4.8%	5.5%	6.0%
Net Profit Margin (%)	6.8%	6.2%	5.7%	6.1%	6.6%
ROE (%)	12.5%	11.1%	10.4%	12.2%	13.6%
Current Ratio (x)	3.82	3.39	3.12	3.14	3.16
Receivable Turnover Days	117	115	87	84	85

Conclusion

Chinasoft has shown strong revenue growth, particularly in cloud services, but faces margin pressures. The company's expansion and investment in new areas suggest continued growth potential. Despite the margin decline, CMBIGM maintains a BUY rating, with a revised target price based on adjusted earnings forecasts. The company's financial position remains strong, with a healthy cash flow and increasing cash reserves, supporting its growth strategy.

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