Key points of investment:
The company published its 23-year semi-annual report. According to the company report, during the reporting period, the company achieved operating income of 390 million yuan, +0.04% year on year, and realized net profit of 45 million yuan, +15.06% year on year. 23Q2 achieved revenue of 218 million yuan in a single quarter, -6.45% year-on-year, and net profit of 29 million yuan, +0.96% year-on-year. The performance was generally in line with expectations.
The card business is growing steadily, and further breakthroughs are expected in the operation and data business. According to the company report, during the reporting period, the company's card and AIOT application business achieved revenue of 312 million yuan, +10.51% year-on-year, maintaining relatively steady growth; the social security operation and big data service business achieved revenue of 69 million yuan, or -21.73% year-on-year, mainly influenced by the pace of order delivery and customer procurement. With the implementation of the demonstration project and further expansion of application scenarios, it is expected to achieve a high increase in 23H2.
People's livelihood data products are progressing smoothly and will bring more room for growth. According to the company's announcement, the company's data products mainly focus on “public data+social data” integrated development and application. The data products “regional employment situation analysis”, “personal professional background check”, “unemployment insurance business verification”, and “pension insurance business verification” play a huge role in improving the digital public employment service system for the government and recovering social security fund losses. They have been accepted by many data exchanges (such as Shenzhen Data Exchange, Fujian Data Exchange, Guiyang Data Exchange, East China Jiangsu Big Data Trading Center, etc.) and will be successfully listed within this year. Replication is being vigorously promoted in cities, and it is expected that rapid growth will be achieved as the market improves.
Gross margin has increased, and product structure has been optimized to improve profitability. According to the company report, the company's overall gross profit margin during the reporting period was 46.65%, +2.2 pct over the previous year. Among them, the gross profit margin of the card and AIOT application business was 48.57%, +1.92 pct. We think it was mainly due to the increase in the proportion of software and application products in this business; the gross profit margin for social operations and big data service business was 39.96%, +0.24 pct year on year. It is expected to increase further in the future as the degree of product standardization increases and the cost advantages brought about by scenario replication.
Maintain a “buy” rating. The one-card business has fully benefited from the social security card replacement cycle, and a benchmark case for the data operation business has been implemented, showing high growth potential. The company actively participated in the exploration of data elements. It has a first-mover advantage in the livelihood data element market, and is expected to achieve high growth in the second curve under policy guidance. Maintaining the previous profit forecast, the company is expected to achieve operating income of 1,401, 20.87, and 3,029 billion yuan in 23-25, and net profit of 180, 270 million yuan, and 4.3 billion yuan. Maintain a “buy” rating.
Risk warning: Data business expansion falls short of expectations; third-generation card promotion falls short of expectations; increased competition has led to a decline in profit margins.