3Q22 performance was slightly lower than our expectations
The company announced 1-3Q22 results: revenue +4% to 197 million yuan, net profit to homo -64% to 66.84 million yuan, net profit after deducting non-return net profit -9% to 135 million yuan; 3Q22 quarterly revenue +28% /+16% month-on-month to 79.88 million yuan, and net profit from positive loss to -29.14 million yuan (vs.
(3Q21/2Q22 had a profit of 6897/51.13 million yuan, respectively), which was slightly lower than our expectations. The loss was 110 million yuan mainly due to changes in fair value, net profit after deducting -0.6% /+17% month-on-month to 55.1 million yuan.
Development trends
The B-side delayed settlement of project revenue or gradual confirmation, and the C-side user growth performance was good. In the 3Q22 A-share market, ADT was -29% /-3% from the previous year to 915.3 billion yuan, and the Shanghai and Shenzhen 300-15% /GEM index was -19% (vs. 3Q21 was -7% /2Q22 both +6%). Despite the pressure on market performance, the company's 3Q22 revenue increased steadily. We think that due to the impact of the epidemic, some B-side projects delayed settlement and collection in Q3. As a result, sales and maintenance service revenue for B-end software customers, mainly securities companies, etc., increased steadily (contributing more than 70% of the total revenue of companies) ; In addition, Questmobile statistics company Tongdaxin App 3Q22 has an average MAU of +94% /25% over the previous year to 1.42 million people, and the securities information service business revenue for C-end customers may have maintained a good growth trend (1H22 +21% year-on-year to 32.57 million yuan, accounting for +7ppt to 28% of total revenue). In terms of key operating indicators, 3Q22, cash received from sales of goods and labor services was +8% /76% month on month to 89.1 million yuan, contract liabilities & advance accounts received -2% /+3% month on month to 108 million yuan1, or support steady growth in future revenue.
The cost advantage is obvious, and changes in fair value and large losses drag down net profit. 3Q22 The company's gross margin was +2.4ppt/month-on-month +3.1ppt to 84%, maintaining a relatively high level; the sales expense rate/management expense ratio was 2.2%/3.0%, respectively, maintaining a relatively low level, R&D expenses +32% /+9% month-on-month to 16.08 million yuan, R&D expense ratio +0.6ppt/month-on-month ratio -1.4ppt to 20%, and R&D strength continued to be consolidated; total investment-related income (investment income+fair value change income) changed from positive to -99 million yuan (vs. 3Q21/2Q22 (RMB 1311/4.7 million respectively), mainly because the company reduced the fair value of the three maturing debt investment products that had not been properly paid with principal and interest to 0; financial revenue -1% yoy /-34% month-on-month to 13.71 million yuan; in addition, the company's effective tax rate was +6.6ppt/+3.3ppt to 18% yoy. Under the combined influence, the company's 3Q22 net profit declined to -29.14 million yuan.
Profit forecasting and valuation
Considering that in the first three quarters, the company reduced the fair value of three debt investment products that had not been properly paid with principal and interest due to maturity to zero, which greatly affected investment income, we lowered 2022/2023 profit by 35%/12% to 180,290 million yuan. The company is currently trading at 29x 2023e P/E; lowered the company's target price by 10% to 117 yuan, corresponding to 38x 2023e P/E and 30% upward space; it maintains an outperforming industry rating.
risks
Stock market activity has declined, business and customer structures are single, and securities information system supervision has become stricter.