Investment Rating - The report assigns a "Buy" rating for the company with a target price of HKD 8, representing a significant upside from the current price of HKD 4.57 [8] Core Views - The company is a leading provider of office IT integrated solutions in China, focusing on customer IT experience and offering flexible subscription-based services [8] - The company has a strong market position with a 14.3% market share in China's pay-per-use office IT services in 2021, exceeding the combined share of the second to fifth players [8] - The company's active enterprise customers reached 45,040 with approximately 1,150,000 devices in service as of FY2023H1 [8] - The company's average customer retention rate was 72% and average net cash retention rate was 114% from 2020 to 2022 [8] - The company's revenue in FY2022 was RMB 1.372 billion, with 85% coming from pay-per-use office IT integrated solutions [8] Business Overview - The company provides a full lifecycle solution for office IT services, including hardware, software, and services [25] - The core business is the pay-per-use office IT integrated solution, which offers IT equipment and managed IT services on a subscription basis [25] - The company has a strong remanufacturing capability, with a standardized process and automated testing technology that can extend device lifespan from 3 years to 7-10 years [28] - The company has developed its own infrastructure system called "Star Cloud" to manage devices and provide customized customer service [30] - The company has entered into a strategic cooperation with Beijing Xinnuo Times Technology to expand the market for Microsoft Azure OpenAI products and solutions [31] Market Outlook - The pay-per-use office IT market in China has significant growth potential, with the penetration rate of 4.5% in 2021 compared to 53% in the US [126] - The number of small and medium-sized enterprises in China is expected to grow from 48.77 million in 2021 to 84 million in 2026, with a CAGR of 11.5% [12] - The office IT integrated solutions market in China grew from RMB 400 million in 2017 to RMB 5.1 billion in 2021, with a CAGR of 95.4% [149] - The company's market share in China's pay-per-use office IT services was 14.3% in 2021, exceeding the combined share of the second to fifth players [152] Financial Performance - The company's revenue in FY2022 was RMB 1.372 billion, with 85% coming from pay-per-use office IT integrated solutions [8] - The company's adjusted net profit turned positive in FY2023H1, reaching RMB 28.33 million [91] - The company's gross profit margin was 45.67% in FY2022 and 44.46% in FY2023H1 [101] - The company's operating cash flow turned positive in FY2022, reaching RMB 595.55 million [104] Valuation and Forecast - The report forecasts the company's total revenue to be RMB 1.273 billion, RMB 1.456 billion, and RMB 1.677 billion for FY2023, FY2024, and FY2025, respectively [15] - The report forecasts the company's adjusted net profit to be RMB 16 million, RMB 88 million, and RMB 102 million for FY2023, FY2024, and FY2025, respectively [15] - The report values the company at 3x PS for 2024, corresponding to a market capitalization of RMB 4.368 billion and a target price of HKD 8 [15] Competitive Advantages - The company has a strong remanufacturing capability, with a standardized process and automated testing technology that can extend device lifespan from 3 years to 7-10 years [28] - The company has developed its own infrastructure system called "Star Cloud" to manage devices and provide customized customer service [30] - The company has a grid-based service layout, providing efficient IT hosting services with 7*24 online support and 2-4 hours on-site service [159] - The company has a strong bargaining power with upstream suppliers and downstream customers, which helps to reduce costs and improve profitability [157]
办公IT服务龙头企业，AI业务如虎添翼