Incident: The company announced its 2023 annual results forecast. The company expects to achieve net profit of 70,000-80 million yuan in 2023, an increase of 1463.2-1686.5%; it is expected to achieve deducted non-net profit of 65-750 million yuan, an increase of 252.8-307.0% year on year. If the effects of impairment of goodwill in 2022 and capital refund expenses in non-operating expenses are excluded, the net profit growth rate for 2023 is expected to be about 94.7%-122.6%.
Gross profit margins continued to rise, leading to a high increase in profits. The company's “bill+terminal” gross profit structure was greatly optimized in 2023:1) The overall rate increase in the billing industry combined with the reduction in channel costs and expenses of the superimposed subsidiary Jialian Pay, while subsidy investment decreased; 2) The company continued to vigorously expand the high-margin overseas electronic payment device business, and overseas revenue and profits of payment hardware grew simultaneously.
Receipts have returned to an upward trend in December, and the subsequent industry pattern is expected to focus on leading positions. The company's revenue declined year-on-year in 2023. We judge that it was mainly affected by adjustments in its risk control compliance strategy, due to the decline in transaction flow in the billing business; however, with the mass shipment of Jialian Payment's billing product line in the fourth quarter, monthly turnover increased sequentially in December. At the same time, along with the gradual clarification of industry supervision policies, the industry pattern is expected to be further clarified. The company will later or readjust its business development strategy, and it is expected that the order acceptance business will return to the growth trend in 2024.
Overseas AIGC continues to monetize, and the multi-modal layout creates growth momentum. The company's AI business has achieved initial results in technology research and commercial operation. The participating subsidiary Duality Intelligence Limited continues to iterate on various tool application functions for overseas markets, and the number of downloads continues to rise, driving the company's investment income year-on-year growth. Furthermore, in October, the company and Shanghai Weisha Network Technology Co., Ltd. jointly funded the establishment of Shanghai Shiyi District Information Technology Co., Ltd. to set up an artificial intelligence research team to carry out research and development of GeneralPurpose AI Agent (GeneralPurpose AI Agent) technology and develop multi-modal AI products. The company will continue to actively invest resources in the future, strongly support the business operation and market expansion of the AI business founding team, and create additional growth momentum.
Profit forecasting and investment advice. With its full industrial chain layout in the electronic payment industry, the overseas “payment+terminal” business is rapidly expanding; at the same time, the domestic billing industry has entered the stage of raising fees and increasing quality. The company is expected to adjust its business development strategy, keep up with the industry's fee increase trend, have great profit flexibility, and maintain a “buy” rating.
Risk warning: offline consumption recovery or falling short of expectations; risk of impairment of goodwill; risk of exchange rate fluctuations; risk of increased industry competition, etc.