The company released a performance forecast for the first half of 2023. It expects to achieve revenue of 37.6-3.86 billion yuan (+13.77% ~ +16.79%), net profit of 0.19.024 million yuan (+68.15% ~ +118.5%), and non-net profit of 0.17-022 million yuan (+80.11% ~ +133.52%). The company focuses on the steady growth of the main fintech business, the accelerated layout of the digital cryptocurrency business, is optimistic about steady growth in performance, and maintains purchasing ratings.

Key points to support ratings

Q2 performance increased, turning a loss into a profit. The company expects to achieve revenue of 19.2 billion yuan (+8.45% ~ +14.16%) in Q2 2023, net profit of 0.31 to 036 billion yuan (+9.64% ~ +29.64%), net profit of 0.30-035 million yuan after deducting non-net profit (+11.85% to +30.74%) (the above growth rates are all compared with the previous year's Yunnan Public Investment Software subsidiary after retroactive adjustment). Q2 Achieved a high increase in quarterly profit, while at the same time, the performance turned a loss into a profit, and the operating and profit situation improved markedly.

Focus on the steady growth of the main fintech business. The company's performance growth in the first half of the year was mainly due to the continued strengthening of the main fintech business. The company focuses on integrated software solutions for customers such as banks, insurance, securities, trusts, etc., covering front, middle and back office business systems. The customer base covers all policy banks, six large commercial banks, and most national stock banks. The company continues to generate revenue at the Postbank and has launched a new generation of personal business core systems to continuously increase its influence through core projects for major customers.

Based in Yunnan, it assumes the central role of digital currency construction. The company formally set up a digital currency special team in 2019. The self-developed “Nantian Digital RMB Circulation Service Platform” includes digital currency functions such as access, wallet, payment, promotion, ecology, etc., which can meet the interconnection and scenario implementation of digital coins by banks, government and enterprise units. Currently, the platform has been applied in scenarios such as banking channels, smart party building, smart cafeterias, and agricultural industry and finance. As a leading enterprise in the information industry in Yunnan Province, the company is expected to play an important role in the digital currency construction process in the region.

valuations

Maintaining the forecast of net profit of the return mother from 2023 to 2025 of 193/245/310 million yuan, the corresponding EPS is 0.49/0.62/0.76 yuan, corresponding to PE 34/27/22 times, respectively. Maintain buy-in ratings.

The main risks faced by ratings

Macroeconomic fluctuations; increased market competition; business expansion fell short of expectations.