Event: the new capital released its quarterly report of 2023 on October 24. In the first three quarters of 2023, the new capital realized operating income of 2.895 billion yuan, a decrease of 12.04% over the same period last year, and a net profit of 552 million yuan, an increase of 80.43% over the same period last year. The deduction of non-net profit was 517 million yuan, an increase of 103.42% over the same period last year.

The profitability has improved significantly, and the performance of overseas electronic payment is better. In 2023, Q3, the company achieved operating income of 935 million yuan, a decrease of 19.94% over the same period last year, a net profit of 220 million yuan, an increase of 96.80% over the same period last year, and a deduction of 211 million yuan for non-net profit, an increase of 98.80% over the same period last year. The larger growth at the profit end is mainly due to the recovery of the economic environment, the increase in the performance of the company's overseas electronic payment products and the gross profit of the receipt value-added business.

The overall rate of the order collection industry has increased, and the AI business has become a new bright spot. 1) the renewal of payment license has been completed, and the ability of risk control has been enhanced: on July 8, 2023, the company's payment license was successfully renewed as scheduled, while the current number of licenses is limited, and the head company has a competitive advantage. by continuously improving the ability of risk control and paying for software and hardware products and services, the company can enhance customer stickiness and increase market share. 2) the profits of the order collection business increased significantly: in the first three quarters of 2023, with the continuous recovery of the domestic economy, the company's wholly-owned subsidiary Jialian pay continued to improve the service level of merchants and actively expand value-added services such as rights and interests, consumption coupons and other value-added services. at the same time, the overall rate of the order collection industry has increased, and the company's order collection business profits have achieved great growth. In terms of order rate, the current average rate in the domestic market is lower than that in the foreign market, and there is more room for growth in the future. 3) AI business has become a new bright spot: in order to promote the long-term development of AI business, the company has set up an overseas platform company. Relying on the deep accumulation in the field of AI deep content generation and video processing technology, the team has continuously optimized the algorithm and technology model, achieved certain commercial results, and launched PicSo and other overseas popular app. At present, the company holds a 35% stake in the platform company, and 2023Q3's quarterly investment income is 12 million yuan, an increase of 15.29% over the same period last year.

Investment suggestion: the company's 23-25 net profit is expected to be 7.59,10.11 and 1.238 billion yuan respectively, with a year-on-year growth rate of 1594%, 33% and 22%, respectively. The current market capitalization corresponds to the PE of 17-12-10 in 23-24-25. Considering that the entire order collection industry is expected to usher in a significant recovery in 2023, the offline order collection rate increases, the company's AI business continues to grow high, and the overall national economy is recovering, and the rapid development of mobile payments in overseas markets, the company is expected to fully benefit and maintain the "recommended" rating.

Risk tips: overseas market expansion is not as expected; the payment industry market competition is fierce; offline consumption recovery is not as expected.