GLODON(002410)TRACKING REPORT:DIGITAL COSTING STARTS A NEW ERA

2022-12-08 20:10:12 和讯  中信证券YANG Zeyuan/DING
  Core views:
  Glodon’s newly launched digital costing platform, a refined digital solution for project cost control released in 1H22, has consistently exceeded expectations, which may form new growth momentum for the Company. Meanwhile, as Glodon continues to deepen its full presence along the value chain in digital architecture, it is likely to generate further synergies from its ecosystem to create more headroom for growth. We reiterate our 2022E-24E operating revenue forecasts of Rmb6.74bn/8.11bn/9.85bn and attributable net profit (ANP) forecasts of Rmb0.96bn/1.33bn/1.82bn, equivalent to EPS forecasts of Rmb0.81/1.12/1.53. Considering the steady progress in its new digital costing solution business, the strengthened edge in generating synergies from its digital architecture ecosystem and its position in the building information industry as a high-quality leader, we assign 60x 2023E PE to derive a target market cap of Rmb80bn, equivalent to a target price of Rmb67, and reiterate the “BUY” rating.
  Abstract:
  Accelerate the big data market development of cost estimation to enter the new era of smart costing.
  Business logic: Rely on data accumulation & closed-loop application to help builders/construction firms refine cost management. Focusing on the issue of data asset loss, Glodon released a digital costing product in Mar, shifting from cost tool software to an enterprise-level cost control and strategic analysis solution and expanding users from cost clerks to financial/management personnel. The new digital costing product focuses on legacy cost estimation customers, while its potential users include occasional/temporary builders, property developers, construction firms, cost consulting companies, etc., with broad room for growth.
  Business value: Empower builders in cost estimation and review scenarios and assist construction firms to make bidding decisions. The new digital costing product can help builders manage the pricing basis in scenarios such as preliminary estimates, budget estimates, and price control in a unified manner with dynamic updates. At the same time, it can assist construction firms to calculate bidding costs based on market prices and historical data to empower bidding decisions.
  Market size calculation: Diversified enterprise-level user needs to warrant another cost estimation business. We roughly estimate that the average revenue per user (ARPU) of the new digital costing product is around Rmb0.2mn, and diversified needs from occasional/temporary builders, real estate developers, construction firms, and cost consulting companies are likely to contribute more than 50,000 potential customers, which will open up a vast market worth tens of billions and create another cost estimation business in the long run.
  Synergies across cost estimation, construction management and digital design will deepen its full presence in digital architecture. In the cost estimation segment, Glodon’s cloud transformation is progressing smoothly, and the new digital costing product will serve as a sustainable growth driver and further improve Glodon’s digital architecture platform of “one horizontal PaaS platform and multiple verticals”. In the construction management segment, newly signed contracts will continue to grow rapidly, and as infrastructure construction brings new increments, its penetration rate may continue to rise. In the digital design segment, Glodon has built a full presence across the whole process of design function from modeling to plotting/drawing and has created a digital architecture ecosystem covering digital design, cost estimation, and construction management. We believe that its edge in generating synergies across the three segments will consolidate Glodon's position as a high-quality leader in the building information industry in the future.
  Potential risks: The macro economy comes under pressure; the impact of regional Covid flare-ups exceeds expectations; construction and housing starts miss expectations; the transformation of cost estimation and the expansion of infrastructure fall below expectations; competition in construction informatization intensifies; the collection of sales/receivables disappoints.
  Investment recommendation: Glodon’s new digital costing product released in 1H22 has consistently beat expectations and may form new growth momentum for the Company. As Glodon continues to deepen its full presence along the value chain in digital architecture, it is likely to generate further synergies from its ecosystem to create more headroom for growth. We reiterate our 2022E-24E operating revenue forecasts of Rmb6.74bn/8.11bn/9.85bn and ANP forecasts of Rmb0.96bn/1.33bn/1.82bn, equivalent to EPS forecasts of Rmb0.81/1.12/ 1.53. Given the average valuation of 64x 2023E PE based on Wind consensus estimates for comparable companies, i.e., Kingsoft Office (688111.SH), ZWSOFT (688083.SH), and Hundsun Technologies (600570.SH), and considering the accelerated promotion of the new digital costing solution, the strengthened edge in generating synergies from its digital architecture ecosystem and its position in the building information industry as a high-quality leader, we assign 60x 2023E PE to derive a target market cap of Rmb80bn, equivalent to a target price of Rmb67, and reiterate the "BUY" rating.
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   【免责声明】本文仅代表第三方观点,不代表和讯网立场。投资者据此操作,风险请自担。

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