Core viewpoints

In the first three quarters, the company maintained a sound operation, with operating revenue up 15.36% year-on-year and non-return net profit up 36.40% year-on-year. Q1-Q3 's gross profit margin was 21.80%, 24.42% and 24.71% respectively, rising quarter by quarter, reaching 23.68% in the first three quarters, up 1.07% from a year earlier. The company adheres to the line of R & D-driven innovation and innovation-driven growth, with R & D investment growing by 21.54% year-on-year, higher than revenue growth. The company continued to promote the optimization of business structure and product structure. In the first three quarters, the revenue from the information technology services sector accounted for 65.57% of the total revenue, accounting for a further increase. It is expected that under the overall pressure of the macro environment, the demand of banks and other customers to reduce costs and increase efficiency will be enhanced, and the company, as the leading IT integrated services manufacturer in the domestic financial industry, is expected to fully benefit. The company is expected to achieve a net profit of 353 million yuan, 442 million yuan and 556 million yuan respectively from 2023 to 2025, with a corresponding PE valuation of 23.24,18.53 and 14.74 times as of October 31, maintaining a "buy" rating.

Event

The company released the third quarter report of 2023:

Revenue in the first three quarters was 3.123 billion, year-on-year + 15.36%; return to mother 249 million, year-on-year + 32.08%; deduction non-return mother 234 million, year-on-year + 36.40%; of which Q3 revenue was 1.099 billion, year-on-year + 12.37%; return mother 99 million, year-on-year + 18.25%; deduction non-return mother 95 million, year-on-year + 20.97%.

The gross profit margin of the first three quarters is 23.68%, year-on-year + 1.07 pctten Q3 gross profit margin 24.71%, year-on-year + 1.80pct; net profit rate of the first three quarters 7.97%, year-on-year + 1.01pct, deduction of non-net profit 7.49%, year-on-year + 1.16pctash Q3 net profit 8.97%, year-on-year + 0.45pct, deduction of non-net profit 8.61%, year-on-year + 0.61pct.

Brief comment

1. The business grew steadily, the gross profit margin continued to rise, and the Q3 performance growth rate increased month-on-month.

In the first three quarters, the company overcame some macro adverse factors and achieved operating income of 3.123 billion yuan, an increase of 15.36% over the same period last year.

In 2023, Q1-Q3 's gross profit margin was 21.80%, 24.42% and 24.71% respectively, rising quarter by quarter. In the first three quarters, the gross profit margin reached 23.68%, up 1.07% from the same period last year. In the first three quarters, the company realized deduction of non-return net profit of 234 million, an increase of 36.40% over the same period last year, of which Q3 realized non-return net profit of 95 million, an increase of 20.97% over the same period last year, which was higher than the income growth rate of Q3. Compared with Q2 deduction, the non-return net profit also increased by 17.69%.

2. Research and development has maintained high growth, and business and product structure have been continuously optimized.

The company adheres to the line of R & D-driven innovation and innovation-driven growth, with a total R & D investment of 300 million yuan in the first three quarters, an increase of 21.54% over the same period last year. The company continued to promote the optimization of business structure and product structure. In the first three quarters, the revenue of the information technology services sector reached 2.047 billion yuan, an increase of 20.46% over the same period last year, and the proportion of business income reached 65.57%, which further increased. Among them, software and digital transformation service product line, software product line and solution product line increased by 20.28% and 25.82% respectively compared with the same period last year, which is significantly higher than the total revenue growth rate.

3. Customers reduce costs and increase efficiency and superimpose consumption recovery, and outsourcing business is expected to further pick up.

In the second quarter, due to the lack of consumer confidence, low consumption willingness and other external factors, the income scale of customer service and digital marketing product line in the company's business process outsourcing (BPO) declined to a certain extent, with consumption gradually picking up, the product line Q3 has shown a trend of recovery, and the annual income is expected to achieve small positive growth compared with the same period last year. Under the overall pressure of the macro environment, banks and other customers have increased their demand for reducing costs and increasing efficiency. As the leading IT integrated services manufacturer in the domestic financial industry, the company is expected to fully benefit.

4. Profit forecasts and investment suggestions:

From 2023 to 2025, the company is expected to achieve operating income of 4.255 billion yuan, 5.129 billion yuan and 6.223 billion yuan respectively, with a net profit of 353 million yuan, 442 million yuan and 556 million yuan. As of October 31, the corresponding PE valuation is 23.24,18.53 and 14.74 times, respectively, maintaining the "buy" rating.

5. Risk tips:

(1) the bank's IT expenditure falls short of expectations: the company fully enjoys the industry growth dividend, and the decline in the IT sector of the bank will directly affect the downstream demand of the company; (2) the macroeconomic recovery is not as expected: the company's customer service and digital marketing product line are affected by external factors such as lack of consumer confidence and low consumption willingness. (3) intensified competition in the industry: the IT segment of the bank is relatively scattered, and there are more competitors in the same business scenario, and the industry competition intensifies or impacts the company's market share; (4) the transformation of business structure and product structure is less than expected: the current banking system is in the iterative cycle of updating the new structure, and the poor progress of the company's product research and development and upgrade will directly affect the bid winning and signing of the company's project.