Description of the event

The company released the 2023 three-quarter report. In 2023Q1-3, the company achieved revenue of 1,682 million yuan, a year-on-year increase of 1.0%; realized net profit of 128 million yuan, a year-on-year decrease of 15.9%; realized net profit withholding of 109 million yuan, a year-on-year decrease of 21.5%; achieved revenue of 625 million yuan, a year-on-year decrease of 2.3%, and realized net profit of 106 million yuan, a year-on-year increase of 19.1%.

Incident comments

Affected by the overall slump in the manufacturing industry, the company's revenue has yet to recover for some time. The 2023Q3 company achieved revenue of 625 million yuan, a year-on-year decrease of 2.3%. The decline in revenue growth in the third quarter was due, on the one hand, to the high performance base brought about by centralized project delivery after the end of the epidemic containment in 2022, and on the other hand, due to the reduction of downstream customer spending on informatization in a context where overall manufacturing recovery fell short of expectations. From a medium- to long-term perspective, the recovery in demand related to the manufacturing industry is an inevitable trend. The recovery in downstream prosperity means a recovery in information technology spending to a certain extent, and the company's revenue may show a long-term upward trend.

Cost reduction and efficiency continued, and profitability increased rapidly. The company's gross margin reached 33.09% in 2023Q3, up 4.15pct from 2023Q2, and profitability increased sharply. The increase in profitability reflects the good implementation of the cost control strategy that the company has been adhering to for a long time, that is, through strict project personnel control, to achieve a continuous increase in the company's per capita revenue generation. Furthermore, at the cost level, the company also achieved a sharp slowdown in overhead growth. The 2023Q3 sales expense ratio was 6.71%, 0.55pct lower than 2023q2, 13.68% lower than 2023q2, and 0.42pct lower than 2023q2. The company's cost control strategy also had significant results.

The acquisition of Sinobo brought strong synergy effects. On September 25, 2023, the company issued an announcement announcing the acquisition of 100% of the shares of Beijing Sinobo Information Technology Co., Ltd. Snoop mainly provides software product solutions and related digital consulting, R&D, implementation and operation and maintenance support services in the digital supply chain field for large and very large enterprises, covering the procurement process for large and very large enterprises, from demand planning, procurement sourcing, collaborative supplier management, contract review, signing, project execution, and project settlement. The launch of this transaction will help further improve the business layout of Siyi Information throughout the country, especially in the northern region; further enhance the market share of Siyi Information in the digital construction field of central enterprises and group enterprises with high development potential and strong momentum; and further accelerate the speed of business development of Siyi Information in the field of pan-ERP enterprise informatization and industrial digital self-developed products.

Risk warning

1. Downstream industry boom falls short of expectations:

2. The company's cost control falls short of expectations.