Kingsoft Office (688111) Coverage Report for the First Time： Ushering in the Leading Domestic Office Software Leader
Kingsoft Office (688111) Coverage Report for the First Time: Ushering in the Leading Domestic Office Software Leader
The leader of domestic office software, it has sharpened its built-in products and ecological barriers for thirty years.The company has been deeply engaged in the office field for 30 years, and its main products have gained international competitiveness. Company registered users reached 2.800 million, accounting for 42 of the total size of the domestic office market.75%.As of March 2019, the company’s main products have exceeded 3 in a month.2.8 billion, of which WPS Office desktop version is more than 1 month live.3.2 billion, mobile version surpassed 1 month.8.7 billion.Continued high investment in research and development to enhance product power, 95% of funds raised for independent research and development, strong development of office software cloud intelligence.Through the comprehensive deployment of mobile terminal + cloud, the company is transitioning from a past product provider to a service / platform vendor. The high concentration of the office software industry is an inevitable trend, and Jinshan is expected to achieve four breakthroughs to increase product penetration.The expansion of basic office software requires a perfect ecology. The more perfect the ecology, the faster the product expansion, which is why Microsoft Office can develop rapidly.Affected by strong ecological attributes, the industry’s Matthew effect is obvious, and high concentration is an inevitable 佛山桑拿网 trend.Once the product penetration rate breaks through the inflection point, the scale will rapidly expand.The main breakthroughs of Jinshan’s office in the future are: 1) On the B-side, benefiting from the needs of Encore, opening breakthroughs in the party, government, and military fields, shifting the government market to cultivate ecology, and improving product capabilities, so as to penetrate into key industries; 2) on the C-sideRelying on the scale advantage of cloud + mobile terminal, gradually expand to PC; 3) content ecology, layout leading ecological vacancies, grab market share with differentiated advantages; 4) comply with the Belt and Road development and layout overseas markets. Encore + cloud two-wheel drive usher in the “main rise”.The company’s main growth logic in the future is in the short and medium term at Encore and the long term in the cloud: 1) Encore’s replacement demand brings development potential.The software Encore market is expected to officially launch in 20 years. Depending on the absolute leading position of domestic office software and the comprehensive advantages of technology and ecology, the company’s 2G revenue will usher in explosive growth.The replacement of party and government agencies is still based on the authorization model. It is expected that the compound license revenue of the company’s office software products will grow at a compound growth rate of more than 100% in 20-21 years.2) The cloud is the main driving force for long-term growth in the future, and the new SaaS track brings opportunities for cornering overtaking: The main task of the cloud business in the future is to improve user conversion rates and ARPU values through product and service experience.The company’s cloud business has doubled in the past three years, with revenue reaching 3.9.3 billion, but the monthly active penetration rate of research users is only 1.55%, there is broad room for improvement in the future.The cloud era company has user scale, ecology and price advantages, and is expected to catch up with overseas giants in new areas. The investment proposal estimates that the company’s revenue for the years 19-21 will be 15 respectively.07/28.07/42.8.6 billion, EPS is 0.82/1.65/2.66 yuan, with reference to the estimated level of comparable companies, taking into account the company’s absolute leading edge in the domestic office software market, giving the company 66 times PE for 20 years, corresponding to a target price of 108.46 yuan. Risk Encore’s progress was less than expected; customers on the cloud were less than expected; fundraising projects progressed less than expected.