The profit side achieved rapid growth. On January 22, 2023, the company released its 2023 performance forecast.
The company expects to achieve net profit of 950-1,050 million yuan in 2023, an increase of 349% - 375% year on year; after deducting non-net profit of 1,010-1110 million yuan, an increase of 121% - 142% year on year.
Receipt hardware has grown doubly. In 2023, the company closely focuses on established development strategies and business goals, continuously optimizes business strategies, seizes opportunities, and achieves good growth in business performance. In terms of merchant operations and value-added services, the company focuses on grasping the favorable conditions for domestic and offline consumption recovery, continuously optimizing the cost structure, and maintaining rapid growth in profitability. In terms of the full year of 2023, the payment service transaction scale exceeded 2.5 trillion dollars, an increase of more than 7% over the same period in 2022. In terms of smart terminal clusters, the company continued to seize the rapid development opportunities of overseas mobile payments, continuously increase the market share in advantageous regions and further strengthen the localization deployment of overseas business, and maintained continuous growth in business performance.
The number of POS machine shipments worldwide has risen to the top. According to the 2022 Global Receipt and POS Equipment Market Report published by Nielsen on the official account of Guotong Xingyi, global shipments of various POS devices reached 148.3 million units in 2022, an increase of 4.5% over the previous year. There have been major changes in the rankings of major POS manufacturers. Among them, Xindalu has risen to number one in the world with a market share of 8.3%, and shipments have increased nearly 10% over the same period last year. As the globalization strategy continues to advance, in order to better meet local market needs, the company continues to increase investment in globalization. It has successively set up branches in Hong Kong, Brazil, Singapore, etc., and has established several business development service centers around the world to continuously improve its localized service capabilities. It has 4 intelligent industrial 4.0 production bases at home and abroad. With high R&D investment, strong supply chain delivery, and the core competitiveness of full-scenario construction, it has provided global customers with three-dimensional full-process services and extended the payment network to all parts of the world.
Actively respond to the implementation of Document No. 259. In September 2023, the People's Bank of China held a work meeting on strengthening the management of payment acceptance terminals and related businesses. The meeting pointed out that the People's Bank of China attaches great importance to the management and development of the billing market, deepens supply-side structural reforms, continuously consolidates the institutional framework, and purifies the payment market environment. In November 2023, Guotong Xingyi, a wholly-owned subsidiary, issued the “Notice on Standardizing the Implementation of Administrative Requirements Related to Document No. 259”, proposing that in order to implement the requirements of the “Notice of the People's Bank of China on Strengthening the Management of Payment Acceptance Terminals and Related Businesses” (Yinfa (2021) No. 259) issued by the People's Bank of China and clearing houses, Fujian Guotong Xingyi Network Technology Co., Ltd. responded positively. Under the guidance of the People's Bank of China and clearing institutions, it has fully completed the implementation of the relevant management requirements of Document No. 259, that is, to fully implement “one machine, one code” and accurately upload transaction information and other core requirements. We believe that the accelerated implementation of “Document No. 259” and the improvement of industry compliance will help increase industry concentration, and that the company, as a leader in third-party payments, is expected to benefit.
Profit forecast and investment suggestions: We believe that considering the continued recovery of offline consumption driving the growth in payment flows and the rapid development of hardware and equipment going overseas, we expect the company's net profit to be 10.06/12.55/ 1,507 billion yuan respectively in 2023/2024/2025, up 363.45%/24.75%/20.14% year on year, and EPS of 0.97/1.22/1.46 yuan respectively, giving the 2024 dynamic PE 20-25 times, a reasonable value range of 24.44- for 6 months 30.50 yuan, maintaining the “better than the market” rating.
Risk warning: Changes in industry regulatory policies, the recovery of overseas machinery and equipment shipments and domestic receipts fell short of expectations.