Company Profile

Shanghai Weaver Network Co., Ltd. is principally engaged in development, research and sales of collaborative management software products, as well as providing related technical services. The Company's main products include e-office, e-cology and e-weaver. (Source: MarketScreener).

Event

For the first quarter 2023, Shanghai Weaver Network ("the company") reported CNY333 million in revenue, a year-on-year increase of 13.62%; CNY0.58 million in net profit attributable to shareholders, a year-on-year drop of 96.20%; -7.1 million yuan in net profit attributable to shareholders and excluding gains or losses from non-recurring items, a year-on-year drop of CNY9 million, turning from gains to losses.

Comments

The company's revenue grew steadily, and the employee stock ownership plan showed its confidence.

The company's profit was under pressure in Q1, mainly due to the year-on-year slowdown in revenue growth and the rapid hike of sales and R&D expenses. The net cash flow from operating activities was -143 million yuan, down 4.2 million yuan year-on-year.

In May 2023, the company unveiled an employee stock ownership plan for an incentive target of 10% revenue or profit growth in 2023, involving 1.63% of the stocks and covering 237 core managers and employees.

The gross profit margin remained stable and the overall expense ratio rose.

The company achieved a gross profit margin of 94.21% in1Q23, a year-on-year decrease of 0.37pps. The sales/management/R&D expense ratios were 69.38%/4.28%/24.53%, respectively, a year-on-year change of 3.55pps / -3.00pps/1.55pps. The R&D expense ratio rose markedly, and the overall expense ratio grew by 2.09pps.

The staff size of the company in 2022 was 1,941, a year-on-year growth of 17.00%, of which 1,075 are R&D personnel, accounting for 55.38%, up 30.78% YoY.

As an OA software leader in China, the company benefiting from AI+ office scenarios.

The company is a domestic OA leader with marketing, project, customer service, cost control, personnel, knowledge, contract and other management software. In 2022, the company introduced a new generation of digital operation platform -"e-cology 10.0" and a new low-code platform - "e-builder", both of which are expected to be integrated with large AI models.

Earnings forecast and investment recommendation

We revise the company's earnings forecast based on the its latest financial report and estimate its net profit attributable to shareholders at CNY287 million, CNY362 million and CNY448 million for 2023, 2024 and 2025 respectively.

We maintain the rating of "Outperform".

Potential risks

Poorer-than-expected company performance; slower-than-expected industry progress; less-than-expected demand.