Incident: The company released a performance forecast for the first quarter of 2023. It is expected to achieve revenue of 165 million yuan to 188 million yuan in Q1 2023, an increase of 5%-20% over the previous year; net profit of 14 million yuan to the mother reached 16 million yuan, an increase of 45%-60% over the previous year.
The 2023Q1 earnings forecast is in line with expectations. According to the company's performance forecast for the first quarter of 2023, the company took advantage of the industry growth opportunities brought by the social security card upgrade to the card, and the differentiated model created with the “data base+midsize+scenario” had a clear lead in the industry, leading to business growth and obvious optimization of various indicators such as gross margin during the reporting period. It is estimated that the company will achieve revenue of about 176 million yuan and 15 million yuan respectively in 2023Q1, an increase of 12.5% and 52.5% over the previous year.
The number of third-generation social security cards issued by the company grew rapidly in 2022, and there is still plenty of room in the national third-generation card issuing market. According to the company's 2022 annual performance report, the company continued to improve the “use service to promote card issuance” business model in the “one-card” field of resident services, effectively implementing the active card issuance model in many cities. The number of cards issued throughout the year increased by 42.34% over the same period last year. According to the Ministry of Human Resources and Social Affairs, by the end of 2022, the number of social security card holders nationwide reached 1,368 million, while the number of third-generation social security card holders was only 267 million. There is still market space for 1,101 million third-generation cards to be issued.
Continued breakthroughs in social operations and big data service businesses are expected to form a second growth curve. According to the company's 2022 annual performance report, the company's “social operations and big data services” achieved a continuous breakthrough. Revenue from this type of business increased 146.37% year-on-year, and the cumulative amount of contracts signed throughout the year was 19,4769,500 yuan, an increase of 139.91% over the previous year. Among them, the company's digital employment service business has formed a standard “three-level linkage +” service system, which has been successfully replicated in Guizhou, Sichuan, Anhui and other places, effectively raising the government's level of digital employment management.
Investment advice: Given that the third-generation social security card industry is in a period of rapid development, 2023-2025 is expected to be the peak card exchange period for third-generation social security cards, and the company has gained a high market share and leading edge. At the same time, the company's “social operation and big data service” business has achieved deep development. We expect the company's net profit to the mother for 2022-2024 to be 115 million yuan, 199 million yuan and 299 million yuan respectively, corresponding to the compound growth rate of 2022-2024 of 59.39%, EPS of 0.37 yuan, 0.64 yuan, and 0.94 yuan respectively, corresponding to the closing price of 17.73 yuan/share on April 3, 2023. PE was 48, 28 and 19 times respectively, maintaining the “buy” rating.
Risk warning: risk of shortage of social security card chips; risk of policy implementation falling short of expectations; risk of issuing third-generation social security cards falling short of expectations.