Incident Overview

Boss Software announced its 2023 annual results forecast on January 22. In 2023, the company is expected to achieve net profit of 326 million yuan to 356 million yuan, an increase of 28%-40% over the previous year; net profit without deduction of 306 million yuan to 337 million yuan, an increase of 33.30%-46.60% over the previous year.

Single Q4 achieved net profit of 308 million yuan to 338 million yuan, an increase of 26.2%-38.5% over the previous year; net profit without return to mother was 297 million yuan - 328 million yuan, an increase of 28.0%-41.4% over the previous year.

The net profit growth rate is in line with expectations, and profitability continues to improve

In 2023, the company is expected to achieve net profit of 326 million yuan to 356 million yuan, an increase of 28%-40% over the previous year; net profit without deduction of 306 million yuan to 337 million yuan, an increase of 33.30%-46.60% over the previous year. It is in line with the net profit expectations not attributable to the deducted mother corresponding to the equity incentive plan issued by the company in September 2023. Specifically, the steady increase in the company's net profit in 2023 is mainly due to the steady increase in the company's net profit in 2023. On the one hand, the company closely followed industrial policy, and achieved year-on-year growth in revenue; on the other hand, the company increased cost and expense control while strengthening the management and collection of accounts receivable. Accounts receivable repayments were relatively good, and accrued credit impairment losses declined year-on-year.

While the company is actively expanding its business, its management capabilities continue to improve, driving continuous improvement in profitability.

The equity incentive target has been achieved quite well over the years. The company can be expected to grow in the future. Currently, the company mainly has four major business segments: electronic financial notes and non-tax revenue, smart government finance, digital procurement, and smart city+digital village, and card finance IT. With the steady progress of electronic financial documents, integrated budget management projects, and the rapid development of digital procurement, the company is expected to achieve high performance growth. Since its listing in 2016, the company has issued a total of 5 incentive plans and 2 employee stock ownership plans, and the historical performance has been quite good. Revenue and profit grew rapidly from 2016 to 2022, with compound annual growth rates of 49.6% and 37.3%, respectively. According to the 2023 restricted stock incentive plan (draft) released by the company in September 2023, the 2023/2024/2025 growth rate is not less than 60%/100%/150%, corresponding to 2023/2024/2025 net profit of 3.8/480 million yuan, an increase of 33%/25%/25% over the previous year, demonstrating the company's confidence in future discoveries, and the future growth of the company can be expected.

Investment advice

We expect the company to achieve revenue of 24.8/32.6/4.29 billion yuan in 2023-2025, with a year-on-year increase of 30%/31%/32%; net profit to mother of 3.5/4.6/61 billion yuan, an increase of 36%/33%/32% year-on-year, maintaining a “buy” rating.

Risk warning

1) Policy support falls short of expectations; 2) Market competition increases risks; 3) Market expansion falls short of expectations.