According to the research report released by Tianfeng Securities, the “buy” rating for FY2023-FY2025 predicts that the total revenue of FY2023-FY2025 companies will be $12.73/1456/1,677 billion, respectively, adjusted net profit of RMB0.16/0.88/ $102 million, with a target price of HK$8. The bank believes that China's office IT usage payment market has broad prospects, and the advantages of comprehensive office IT solutions are obvious. Easypoint Cloud is a leading enterprise in the industry, and its technological scale advantage is constantly increasing. As subscription fees for mainstream devices are further reduced, the number of the company's active customers and the size of service devices will continue to grow rapidly.
Tianfeng Securities's main views are as follows:
Easypoint Cloud is a leading company in China's office IT service industry. AI models help Gao Fei
Easypoint Cloud is a major supplier of comprehensive office IT solutions in China. The company focuses on customer IT experience, and is committed to creating a closed loop in the office IT industry chain. It provides customers with ready-to-use integrated office IT solutions, equipment sales, and SaaS and GPT product services through innovative circular subscription methods to help enterprises achieve asset-light office IT equipment. According to Frost & Sullivan data, EasyPoint Cloud's market share of office IT services in the Chinese enterprise usage payment model reached 14.3% in 2021, surpassing the sum of the second to fifth largest companies. As of FY2023H1, the company has 45,040 active enterprise customers and about 1,150,000 service devices. The company adheres to the pay-as-you-go subscription model. With an average customer retention rate of 72% and an average net cash retention rate of 114% in 2020-2022, it already has an industry-leading user base. In fiscal year 2022, the company's revenue was 1,372 million yuan, of which integrated work-and-go office IT solutions accounted for 85%.
China's office IT usage payment market has broad prospects, and comprehensive office IT solutions are growing rapidly
In 2021, the Chinese enterprise office IT service market was about 156.1 billion yuan, of which the pay-per-use model market size was only 7 billion yuan, accounting for 4.5% of the overall market. Compared with the 53% pay-per-use ratio in the US, it has great potential for growth. Under the trend of digital transformation, the expectations of enterprise employees for internal IT support are gradually shifting from basic trouble/repair tasks to productivity-oriented services, and comprehensive office IT solutions can meet the needs of customers at all stages of equipment use and are presented to customers in a flexible form of service. The bank believes that comprehensive office IT solutions are expected to maintain a high industry growth rate for a long time in the future.
The company's size advantage continues to grow, and adjusted net profit changed from loss to profit
With nearly ten years of professional accumulation, EasyDianyun has industry-leading remanufacturing technology, and has built a grid sales and service layout covering more than 100 cities across the country to provide enterprises with full and comprehensive caring services. The number of active customers and scale of service equipment is growing rapidly, economies of scale are becoming more and more remarkable, remanufacturing costs continue to decline, and barriers to technical scale are deep. As can be seen from FY2023H1's financial results, despite the decline in the company's revenue growth rate and phased pressure due to the pandemic, the number of active customers and service equipment maintained a growing trend. At the same time, the cost rate declined steadily during the period, and the net operating cash flow situation continued to improve. In the future, as the impact of the epidemic gradually weakens, the company's profit is expected to recover rapidly.
Risk warning: Liquidity in the Hong Kong stock market falls short of expectations, growth in the number of subscribers falls short of expectations, macroeconomic recovery falls short of expectations, risk of cash liquidity risk, risk of stock price fluctuations, and risk of differences in valuation systems.