类别:公司 机构:兴业证券股份有限公司 研究员:JIANG Jialin/WU Mingyuan 日期:2020-03-23

Company Profile

    Beijing United Information Technology Co., Ltd. is a China-based company mainly engaged ine-commerce business. The Company is positioned on the B2B (Business to Business) integratedservice platform, based on industrial e-commerce and supported by Internet data. It provides onlinecommodity trading, commercial information services and internet technology services of industrialproducts and raw materials for related industry customers. The Company sells its goods mainlythrough self-operated malls and online market malls in Duoduo platform.(Source: Reuters)Comments

    The performance acceleration showed the platform effects and the cash flow hit a record high.

    The company’s 2019 revenue announced in its preliminary financial report on January 10th 2020 andits net profit attributable to shareholders and its net profit after deducting non-recurring itemsreported in its formal financial results were around the median and above.

    For Q419, the company realized revenue of CNY 3.052 billion(bln), rising128.81% and 27.58percentage points (pcts) from a year earlier and 40.99 pcts from a quarter earlier; the revenue for anindividual quarter and its year-on-year (YoY) growth hit a new high since 2018. The full-year newoperating cash flow registered CNY 380 million (mln), soaring 391.2%, hitting a record high.

    During the reporting period, the indicators of expenses/gap between advances paid and advancesreceived/inventory continued to improve, showing an excellent financial capability.

    Given the company would put GMV into revenue calculation, more attention shall be put on theratios of operating financial data and gross margin. In the reporting period, the ratio of expense/grossmargin was 43.97%, down 8.32% YoY; the ratio of the gap between advances paid and advancesreceived/gross margin stood at 66.34%, declining 8.01%; the ratio of inventory/ gross margin was2.96%, a 5.96% drop from a year earlier. With the growing of its platform effects, its financialindicators continue to improve.

    With huge transformation potentials of B2B from 1.0 to 2.0, it demonstrated obvious effects. By virtueof industrial resources accumulation for 2 decades from B2B 1.0, the company’s transaction businesscontinues to grow, showing the obvious platform effects.

    By sector, coating chemical/ sanitation supplies/glass industry registered 109.81%/37.9%/100.92% growth from a year earlier, respectively; the papermaking/ chemical fertilizer/grain and oil realizedrevenue of CNY 24mln/CNY 126mln/CNY 79mln, respectively, and papermaking and chemical fertilizermade profit of CNY 210,000 and CNY 2.81mln for the first transformation year, while grain and oilmade profits and losses meet.

    Earnings forecast and investment recommendationConsidering the company’s obvious B2B 2.0 transformation outcomes and its enhancing capabilitiesin administration and expense-control, we revised up its earnings forecasts. The company is estimatedto realized net profit attributable to shareholders of CNY 243mln/CNY 362mln/CNY 525mln for year2020/2021/2022. Maintain “Outperform” rating.

    Potential risks

    intensified competition; huge price fluctuations; slower-than-expected expansion of new businesses