(report producer/analyst: Huafu Securities Qian Jinyu)
1. Guanglianda : a leading domestic digital construction company, a leader in digital transformation and upgrading in the industry
.1 Focus on informatization of the construction industry, strive to be a global leading digital construction platform service provider
helps the industry to transform and upgrade digitally, and gradually demonstrates professional global influence.
Since its establishment in 1998, it has taken the DOS version of "engineering cost series software" as the starting point, based on the construction industry, and gradually built an efficient and agile research and marketing service system around the entire life cycle of the engineering project.
In 2004, Guanglianda successfully launched the list budget software GBQ 4.0.
In 2017, BIMLDA launched the BIM application secondary development platform for the first time, providing technologies and platforms involved in BIM application development, lowering the threshold for BIM technology development.
In 2019, the company officially launched a digital project management platform, providing one-stop services to the construction industry, comprehensively applying digital technologies such as BIM to promote the transformation and upgrading of construction project management .
After more than 20 years of development, the digital cost business has obvious competitive advantages in China. In 2021, the company's core product "Digital Project Management Platform" "has won the China Digital and Software Service Most Competitive Product Award".
The equity structure is stable, and the employee stock ownership plan is carried out in an orderly manner.
The controlling shareholder and actual controller of the company are Diao Zhizhong . According to the 2021 annual report, as one of the founders of the company, Diao Zhizhong's shareholding ratio reaches 15.98%. Tu Jianhua , Chen Xiaohong , Wang Jinhong, Wang Xiaofang, and An Jinghe are also founders of the company and all work in the company. The cumulative shareholding ratio of the five people is 16.31%. In 2022, the company will implement an employee stock ownership plan, with the participation of the company's core managers and core technical personnel, establish a profit sharing mechanism, gather compound cadres and business leaders, and promote the company's long-term, sustainable and healthy development.
core team is stable and has rich industry experience. 's core team has long focused on the construction industry and has a comprehensive understanding and control over the characteristics and business processes of the construction industry. Mr. Diao Zhizhong, the founder of the company, has served as an engineer at the Computing Center of Beijing Petrochemical Engineering Company. He has been deeply engaged in the industry for many years and has rich industry experience.
.2 The core business fully completes the established goals, and continuously provides construction companies with digital capabilities
consolidates new construction business, breaks through new design business, and lays out innovative business. Since its establishment for more than 20 years, the company has always focused on the field of building informationization/digitalization. It is now in the company's eighth three-year strategic planning period, and has gradually formed digital cost, digital construction, and digital design planning periods, and its business has gradually moved towards intelligence. The overseas business segment of
digital cost business also includes the development of Southeast Asian business segments and product lines of other innovative business units. As the company's mature business, the digital cost business mainly provides software products and data services to construction project participants. It now mainly provides customers with products and services through the subscription-based SaaS model, and is an international series of products in the strategic market, Cubicost series of products. As the company's key breakthrough growth business, digital construction business focuses on the process of engineering project construction, providing construction companies with platform solutions from enterprise management to project management, including project-side BIM, smart construction site series products and project-enterprise integrated products for construction companies.
's overseas business segments include the wholly owned subsidiary of Finland , which operates the MagiCAD series of electromechanical design software, and the construction Glodon Gsite international products covering the European market. During the "83" strategic planning period, the business focused on expanding from "project-level application" to "enterprise-level multi-project application".
Digital Design business is an emerging business that the company is focusing on developing. It mainly aims at design institute customers and provides products such as architectural design, municipal design, digital delivery review of architectural achievements, including BIM space, Civil municipal products and other products that are leading in the market. During the strategic planning period, it is committed to building architectural design products with independent graphics platforms, and is competing to make breakthroughs in new business areas such as cities, procurement, universities, and finance. As an emerging business incubated by the company,
innovative business unit provides guarantees and support for the transformation and upgrading of the construction industry from various dimensions such as CIM planning and construction management, new city construction, supply chain services and talent training. Currently, it mainly focuses on product polishing and benchmark project verification.
The company's customer entity is the construction industry. In 2021, the year-on-year growth rate of construction customers reached 40.95%, and the gross profit margin also remained at a relatively high level, reaching 83.95%. In 2021, the company accelerated the transformation of "Digital Broadband" and initially established a closed loop that drives process construction and drives organizational upgrades, so as to achieve full implementation of digital upgrades for customer service. In 2021, the company's independent lightweight BIM engine BIMFace has reached 500 active applications, and more than ten privatized customers have been added.
.3 The financial performance is outstanding, and the future is expected to be
operating income grows rapidly and the net profit performance is outstanding. From 2019 to 2021, the company's operating income continued to rise, achieving operating income of 3.46/3.95/5.56 billion yuan respectively. In 2021, the operating income of increased by 40.92% year-on-year.
In terms of net profit attributable to shareholders, it achieved significant growth from 2019 to 2021, with year-on-year growth of 40.6%/100.1% respectively in 2020 and 2021. In 2022Q1, operating income and net profit remained stable growth trend, with year-on-year growth of 34.7%/41.9% respectively in the reporting period. The company's revenue growth and net profit growth pace are relatively unified, highlighting the sustainable growth of the company.
digital cost business is the company's core business.
mainly provides software products and data services to all parties involved in the construction project cost, including engineering pricing business lines, engineering calculation business lines, engineering information business lines and e-government business lines. Among them, the application rate of data services such as cloud pricing, cloud computing main products and engineering information China Guangmei Network reached a new high, which has increased customer satisfaction, transformation rate and renewal rate. From 2019 to 2021, the revenue share of this business was stable at around 70%, and reached 92.3% in 2021.
digital construction business focuses on the project construction process and uses the "platform + component" model to provide construction companies with platform solutions from project management to enterprise management. In 2021, the number of newly signed contracts increased rapidly, achieving rapid growth. The business revenue increased by 27.8% year-on-year, and the overall gross profit margin was relatively high, reaching 65.8%.
digital design business belongs to the company's focus on developing emerging businesses, providing products such as architectural design, municipal design and digital delivery review of design results. In October 2020, the company acquired Luoyang Hongye Information Technology Co., Ltd. and began to lay out digital design business. In 2021, the business was integrated, and the independent digital architectural design products made a breakthrough. The company's revenue share continued to grow, with a gross profit margin reaching 95.8%.
Overseas business includes Cubicost, an international series of products of digital cost business and international products of digital construction business. In 2021, the epidemic difficulties were overcome and revenue increased by 3.9% year-on-year. Other businesses include innovative business units, mainly product polishing and benchmark project verification. The business's operating costs increased rapidly in 2021, mainly due to the completion of preliminary acceptance of the digital city business part and the recognition of revenue costs.
gross profit margin is high and the period expense rate is stable.
The company's gross profit margin remained at around 85% from 2019 to the first quarter of 2022, maintaining a stable high. At the same time, the net profit margin rose from 7.35% in 2019 to 12.92% in 2021, and the company's profitability gradually increased. Financial expenses in 2021 decreased by 204.37% year-on-year, mainly due to the fact that the company raised funds and the return of long-term loans, the interest income increased, and the interest expense decreased.
2021 sales expenses increased by 26.39% year-on-year, mainly due to the increase in cost business transformation and the increase in personnel for strengthening channel construction business, but the overall sales expense rate has declined, highlighting the company's strong cost control ability.
The proportion of highly educated talents and R&D personnel has increased, and employee incentive plans have become normalized.
From 2019 to 2021, the total number of employees of the company increased by 33.32% year-on-year, and the proportion of highly educated talents increased significantly. From the perspective of employee structure, the number of R&D personnel has been increasing, and the proportion of R&D personnel has increased from 38.64% to 41.46%. The company uses normalized equity incentives, and the G-TUP (Glodon Time Unit Plan) incentive plan continues to cover short, medium and long-term employee compensation systems, promoting the development and retreat of talents and companies.
2. Based on "cost + construction", digital construction transformation brings huge opportunities
.1 Digital cost market share continues to lead, and cloud transformation can be expected in the future
Digital cost maintains an absolute advantage in market share for decades. Broadcom is a leader in the field of informationization/digitalization. It adheres to the concept of customer success and leads development with innovation, gradually forming significant competitive advantages.
Digital Cost Business As the company's mature business, it firmly occupies a leading position in the domestic digital cost field, including engineering pricing, engineering calculation volume, engineering information, and e-government business lines. Currently, it mainly provides customers with products and services through the SaaS subscription model, which covers all 29 regions across the country.
According to the investor exchange minutes disclosed by the company in 2019, the company's digital cost business market share was around 60% in the early stage of listing. After more than ten years of development, the market share has reached a higher level.
's main products have remained stable, and the market share of computing software far exceeded that of competitors. The company's main competitors include software such as Luban, Pinming, Shenji Miraculous Point, etc., but because the company's products have the ability to provide full product process and service, and these competitors have not yet been listed, Guanglianda has become the only company in the A-share market to make calculation software.
According to data, the company's graph computing software market share reaches 55.1%, far exceeding other competitors in the market.
has been planning for ten years of cloud transformation, and cloud revenue has continued to grow.
Company continues to promote the upgrading of the concept of "digital cost management" in the context of the current market-oriented cost transformation. In 2013, the company officially released its cloud strategy; the cost business began to fully convert to the cloud; in 2017, the cost cloud products began to be promoted nationwide; in 2021, the last four regions, including Jiangsu, Zhejiang, Anhui and Fujian, entered the cloud transformation of digital cost business, and the national coverage of the cloud transformation.
The conversion rate of new transformation areas and the renewal rate of old transformation areas have been double improved, mainly due to the subscription model improving the cost-effectiveness of products and services, the application rate of data services such as cloud pricing, cloud computing volume, and engineering information China Guangmei Network has reached a new high. The proportion of cloud revenue in cost business revenue continued to increase. In 2021, cost cloud revenue increased by 58% year-on-year, accounting for 67.2% of cost business revenue.
.2 The construction business is expanding rapidly, and the BIM market prospects are bright
The company's construction business includes three categories of products: job level, project level and enterprise level. Among them, job-level products are mainly single-point application software or collaboration platforms, including construction BIM modeling software BIMMAKE, Zebra Progress, etc.; project-level products are the core products of this business, mainly including BIM and smart construction site series products, accounting for the highest proportion of operating income among different types of products;
enterprise-level products are the expansion of project-level products in corporate business, mainly including project management systems, collaborative office systems and other project-enterprise integrated products.
company has formed an overall digital construction solution. Based on the digital project management platform, it has developed multiple digital application systems covering job-level, project-level and enterprise-level, providing one-stop services for construction companies' digital transformation .
The number of project-level projects in the company has grown steadily, and the customer scale has grown rapidly.
2021, the number of project-level product projects exceeded 55,000 during the reporting period, and the number of new products remained stable, reaching 16,000; the cumulative number of customers served exceeded 5,000, and the number of new customers achieved a blowout growth compared with last year, with 1,600 new customers.
In the context of digital transformation of construction company customers, the company seized the opportunity and gave priority to rapid expansion of contracts in the first half of the year. In the second half of the year, it focused on implementing delivery guarantee income and collection, accelerated the process of transformation from contracts to operating income, and achieved scale expansion of business. Among the newly signed contracts in 2021, the proportion of integrated solution contracts between enterprises and project enterprises accounted for 15%, making a rapid breakthrough among leading customers.
BIM Market expansion brings opportunities to the company.
According to the global BIM development prospect forecast released by various institutions, the global BIM industry market size showed a stable upward trend from 2022 to 2026. In 2026, various institutions predicted that the average global building information model market size exceeded US$13 billion, with an average annual compound growth rate of about 15%, and the development prospects of the BIM industry are clear.
According to institutional forecasts, the market size of the BIM industry will reach 37.13 billion yuan in 2026. Although my country's BIM research started late, the proportion of the domestic BIM market in the global market is gradually increasing, highlighting that under the background of informatization of the construction industry, the proportion of domestic enterprises applying BIM will grow day by day.
In the construction stage, construction companies pay more attention to organizational rationality and efficiency, and are committed to using BIM technology to improve project management level and meticulousness. The company has certain first-mover advantages in BIM software, covering all processes of engineering construction, achieving full-field layout, and having strong competitiveness in the management platform software market.
Company acquired Hongye Technology in 2020, improving its layout in the digital construction industry chain. The company is expected to continue to benefit from the expansion of the BIM market size.
Chart 19: 2022-2026 Global BIM Market Size Forecast (Unit: 100 million US dollars)
Chart 20: 2022-2026 China BIM Industry Market Size Forecast
.3 The construction information market contains huge potential, and policies drive the transformation and upgrading of the construction industry
The construction industry has a large scale but the degree of informatization is low, and there is huge room for improvement in the future. According to data from the National Bureau of Statistics, the total output value of the national construction industry in 2021 was 29.3 trillion yuan, an increase of 11% year-on-year, and the scale of the industry is still expanding; the total output value of the construction industry accounts for 25.6% of GDP, and its status as a pillar industry for national economic development is still stable.
Since the outbreak of the new crown epidemic, the construction industry has faced problems such as continuous decline in operating rates, supply chain breaks, construction delays, and significant increase in labor costs. Against this background, the demand for construction informationization construction and digital transformation has further highlighted, but compared with developed countries, my country's construction informationization level is relatively backward. According to data from the Industrial Information Network, my country's construction informationization investment in 2018 accounted for about 0.08% of the total output value, while the value in developed countries is 1%. This shows that my country's construction informationization industry has huge room for development.
From 2011 to 2018, the scale of my country's construction information market has developed rapidly, from 4.93 billion yuan to 24.5 billion yuan.
With the superposition of low penetration rate of and the wave of new technology to promote industrial transformation, the proportion of my country's construction informationization investment will surely increase gradually. According to the forecast of Zhiyan Consulting, as of 2025, the scale of my country's construction informationization market is expected to exceed 100 billion yuan, reaching 129.89 billion yuan. As a domestic leader in digital construction, the company's main digital products are expected to further expand.
policy promotes the transformation of the construction industry to informatization.
In January 2022, the " "14th Five-Year Plan" Digital Economy Development Plan" issued by the State Council and the "14th Five-Year Plan" issued by the Ministry of Housing and Urban-Rural Development both mentioned the important goals of digital innovation leading the integration of digital technology with the real economy, the construction industry and advanced manufacturing industry , and the deep integration of new generation information technology, etc., digital technologies drive the transformation and upgrading of traditional industries.
Chart 23: Key policies of the national smart construction industry
3. Profit forecast and valuation
.1 Profit forecast
The company has been deeply engaged in digital cost business for many years and has gradually developed multiple sectors such as digital construction, digital design, and innovative business.
Guanglianda is moving to develop the company into a platform-oriented enterprise in the construction industry, gradually completing the three major goals of cloud-based cost software business, building a digital construction industry platform, and Digital Guanglianda. The in-progress project integration management platform will be the core foundation of Broadcom's second growth curve. PaaS+cloud applications will bring rapid growth to the business. With the transition period passing and the stability of new businesses, gross profit margins are expected to remain stable.
Digital Cost Business: Since 2017, the company's cost business has transformed from a product sales model to a SaaS model that provides services. At present, the cloud transformation of cost business has been completed. The SaaS model will improve customer stickiness, and will also reduce the growth rate of sales expenses and release the transformation dividends.
We expect the company's digital cost business growth rate to continue to rise in 2022-2024, at 30%/25%/20% respectively. Gross profit margin will gradually increase under the company's competitive advantage of SaaS, at 92.9%/93.3%/93.7% respectively.
Digital Construction Business: company has gradually completed the accumulation of the construction business market and is expected to continue to maintain a high growth rate. We expect the company's digital construction business growth rate to continue to rise from 2022 to 2024, at 18%/16%/14% respectively. With the maturity of the construction business and the effective accumulation of sub-industry experience, the gross profit margin remained stable, at 65.2%/64.6%/64.3% respectively.
Digital Design Business: is in the entry stage of design business. With the increase in R&D investment in the past two years, output has begun to show results and will maintain rapid growth. We expect the company's digital design business revenue growth rate to be 45%/40%/35% respectively from 2022 to 2024. The gross profit margins were 95.8%/95.8%/95.8% respectively.
Overseas business: We expect the company's overseas business revenue growth rate to be 4%/4%/4% respectively from 2022 to 2024. The gross profit margins are 89%/89.1%/89.2% respectively. Other businesses: As the company's innovation sector, the business is still in the expansion period, and investment has entered a time point of large increase.
We expect the company's other business revenue growth rates to be 60%/40%/30% respectively in 2022-2024. The gross profit margins are 29%/24%/27% respectively. On the expense side, since the company also needs to reserve R&D personnel and sales personnel for iterative innovation of products, the business needs to be further expanded. At the same time, the SaaS model will improve customer stickiness and will also reduce the growth rate of sales expenses.
Therefore, we expect that with the realization of transformation and the stable implementation of new businesses, the growth rate of R&D expenses will be less than the growth rate of revenue. The company's R&D expense ratio will be 23%/22%/21.8% from 2022 to 2024, showing a gradual downward trend; the sales expense ratio will be 28%/27%/27% respectively.
.2 Relative valuation
We expect the company's operating income from 2022 to 2024 to be 7.14/8.86/10.6 billion yuan respectively. The net profit attributable to shareholders was RMB 99/140/1.71 billion, a year-on-year increase of 49.4%/41.3%/22.7%.
We select Deep Consensus (solution provider), Kingsoft Office (basic software), and UFIDA Network (basic software) as comparable companies, with an average PE of 76 times in 2022. Give the company 76 times PE, with a target price of 63.1 yuan.
Chart 25: Comparable company valuation table
4. Risk warning
Risk of technology and product development not as expected: The construction industry is facing a period of transformation, with risks of customer needs not being understood, poor product design, and low compatibility with customer needs.
Uncertainty risks brought by force majeure factors such as the new crown epidemic: affects the delivery of some of the company's domestic business contracts and the development of overseas business.
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