The software business is still growing slightly under the pandemic. Delays in acceptance and increased investment have led to short-term fluctuations in 2022 results. Benefiting from the wave of distributed IT migration of banks, the company's software development business continued to grow in 2022, achieving revenue of 935 million yuan, an increase of 1.35%; the system integration business saw a sharp decline in revenue due to an increase in the proportion of direct customer purchases. The company achieved revenue of 1,441 billion yuan in 2022, a year-on-year decrease of 36.79%. Software gross margin declined due to delayed delivery of software projects and increased personnel investment. In addition, 42.459 million yuan of goodwill impairment has been calculated throughout the year for asset groups such as Shanghai Ruimin and Kantou Entertainment. In 2022, the company achieved net profit of -75.2422 million yuan, and net profit returned to the mother after excluding investment losses related to the preparation and disposal of subsidiaries for goodwill impairment was 2,834,800 yuan.
Uninspected projects were accepted at an accelerated pace, and the company's software revenue grew rapidly in Q1 2023. In 2023, Q1 achieved software business of 198 million yuan, an increase of 43.9% over the previous year. In 2023, Q1 achieved overall business revenue of 258 million yuan, an increase of 18.19% over the same period last year, and the net profit of the mother was 10.5 million yuan, a four-fold increase.
The rigidity of bank IT investment, combined with the recovery of the epidemic and the improvement in human efficiency, performance growth is more certain. With the steady increase in IT investment by banks with rigid demand such as digital transformation, credit innovation, and digital currency, compounded by the recovery of the epidemic and the improvement in human efficiency, it is expected that profits will be extremely elastic, and bank IT recovery will be more certain.
Bind Jindian, a subsidiary of the central bank, to welcome increased gross margin, high certainty, and sustainable growth. In January 2023, Gao Weida signed a strategic cooperation with Jindian, a 100% holding subsidiary of the central bank, which ushered in huge business opportunities for small and medium-sized banks, agricultural credit, and regulatory technology markets. At the same time, Jindian assumes the role of “referee” of bank technology. Orders are highly certain and sustainable, and are expected to continue to bring impressive business opportunities to Gao Weida in the next 5 years. It is estimated that the 2023-2024 Golden Power Cooperation will bring GaoWeida 600 million yuan and 1.7 billion yuan in software development business orders, respectively. Furthermore, during the cooperation process, Gao Weida is expected to take on the role of general contractor, and gross margin is expected to increase from 30% to over 35%.
Profit forecast: We forecast that the company will achieve revenue of 19.50, 28.00 and 3.680 billion yuan in 2023-2025, an increase of 35.36% over the previous year. 43.59% and 31.43%; the net profit achieved by the mother was 1.99, 282, and 386 million yuan respectively, and the growth rates of 2024-2025 were 42.05% and 36.75% respectively. EPS was 0.44, 0.63, and 0.86 yuan respectively, and the corresponding P/E was 28.43, 20.01, and 14.63 times, giving a “buy” rating.
Risk warning: Market competition intensifies, financial and electronic cooperation falls short of expectations, and employee costs increase.