Kingsoft Office (688111) first coverage report: domestic office software leader cloudification
Leading domestic office software, the domestic office market is far ahead. Jinshan Office is a leading domestic office software and service provider.In March 2019, the number of monthly active users (MAU) of the company’s main products exceeded 3.2.8 billion, of which WPS Office desktop version has more than 1.3.2 billion, ahead of other domestic office software; monthly active users of WPSOffice mobile version exceed 1.8.7 billion; the company ‘s other products (such as Kingsoft PowerWord, etc.) have close to zero monthly active users.1 billion, continue to lead other domestic office software.From 16 to 18 years, users of the company’s WPS Office office software accounted for 27 of the total number of users in the domestic office market.81%, 38.40% and 42.75%, showing a continuous upward trend, far ahead of other domestic office software vendors, and competing with mainstream international office software vendors.  Comprehensive product layout, using different strategies for desktop / mobile / cloud and Microsoft’s differentiated competition. The company provides desktop, mobile, and cloud services in all aspects of the office product matrix. Through differentiated and refined product competition and low-cost / free products/ Service strategy for market expansion.The desktop version standard competes with Microsoft differentiated through a small and refined product strategy, and uses domestic alternatives and security features to enter the ToG market.The mobile version builds a mobile office trump application through excellent 淡水桑拿网 product performance, and utilizes free strategies to capture small and medium customers.In addition, the company deploys cloud office services in multiple directions to create a cloud ecosystem and uses low-cost strategies to compete directly with Microsoft.  Keeping up with the trend of software cloudification, the strategic transformation has successfully driven the rapid growth of operating income. Software subscription fees are an important trend in the existing software market. It can resolve piracy losses and achieve a service partner model for the purpose of customer retention.The company provides one-stop cloud services and has different service models for individuals and institutions.The company’s office service subscription revenue continued to increase from 2014 to 2018, becoming the main driving force for the company’s performance growth. The proportion of revenue and gross profit increased significantly. The proportion of revenue and gross profit in 2018 was 34 respectively.78%, 32.33%.With the development of Internet users ‘estimated habits, and the company ‘s product market influence and huge user base, it is found that the monthly user life is gradually increasing, and the conversion rate of free users to users is increasing.Space resistance.  The investment suggestion company is the leader in the domestic office software segmentation field. It is predicted that the company’s revenue in 2019-2021 will be 15 respectively.83 ppm / 21.38 ppm / 28.07 million yuan, a 10-year increase of 40% / 35% / 31%, the net profit attributable to mothers was 3.8.5 billion / 5.6.8 billion / 8.84 trillion, an annual increase of 24% / 48% / 56%, EPS is 0.83/1.23/1.92 yuan / share.Comprehensive PE and PS estimation methods, we believe that the company’s reasonable market value is 60-75 billion US dollars, corresponding to a reasonable and feasible 130.15-162.69 yuan.In view of the company’s long-term growth potential, the company will be given an “overweight” rating for the first time.  Risk Warning: Product Competition Intensifies Risk; Subscription Bidding Is Less Than Expected Risk; Product Single Risk; Technology Loss Risk