Event Overview: On January 26, 2024, the company released the 2023 performance forecast. The estimated net profit for 2023 is about -120 million yuan to -600.0 million yuan, and the loss amount has been reduced.

2023Q4 revenue is expected to increase rapidly, and the hotel and catering information technology business will pick up across the board. Based on the median of the current forecast range, the company's median revenue in the forecast range for 2023 is about 3.1 billion yuan, an increase of about 20% over 2022. According to the above estimates, the company's 2023Q4 revenue growth rate is expected to reach 83% year-on-year. The company said that revenue is expected to increase compared to the same period of the previous year, mainly due to a significant increase in revenue from hotel and catering information system products in 2023 compared to the same period last year. At the same time, on the profit side, since the company is still in a critical period of international transformation, maintaining a high level of product R&D investment and market expansion efforts, international business revenue still needs to be continuously accumulated by the number of customers to achieve the same level of investment, so the company's net profit returned to mother in 2023 is still at a loss.

Through this performance forecast, we see that the company is recovering rapidly on the business side, and the 2023Q4 recovery trend is obvious. Although the profit side is under pressure in the short term, the relevant investment is to advance a long-term internationalization strategy, so we are still optimistic about the company's long-term prospects as a global SaaS leader.

Actively developing an internationalization strategy, its product, the Shiji Enterprise Platform, achieved a major breakthrough, and the Intercontinental Group SEP platform has launched more than 200 hotels. 1) Cloud SEP: The company is participating in the bidding and testing of next-generation hotel information systems by several major international hotel groups, and has signed contracts with benchmark customers Intercontinental, Langham and Peninsula Hotels Group.

By the end of November 2023, the company completed the successful launch of the Shiji Enterprise Platform in the 100th to 200th IHG hotels in just three months. According to the company's 2023 semi-annual report, while cooperating with many European hotel groups, Shiji Enterprise Platform continues to expand its listing in the Peninsula, Intercontinental, and Langham Hotels Group, which have signed a benchmark. The hotel groups that have already gone online include Peninsula, Intercontinental, Langting, Ruby, and Sircle. 2) Cloud POS: As of June 2023, Infrasys Cloud, the company's next-generation cloud catering management system (cloud POS), has entered a period of steady and rapid development. It has been steadily promoted in hotel groups such as Marriott, Intercontinental, Hyatt, Peninsula, and Shangri-La. It is the only cloud POS product that has signed contracts with all of the world's most influential TOP5 international hotel groups. The total number of Infrasys Cloud POS products launched is 3502.

Intercontinental Group's current strategy is to promote the batch launch of SEP platforms, cover hotels in China as soon as possible, and improve the group's single inventory usage process; the company's current strategy is to actively promote the launch of other groups and hotels around the world, including the US. Currently, SEP has successfully launched in more than a dozen countries, including China, the United States, the United Kingdom, Germany, and Japan, laying the foundation for signing more international hotel groups in the future. At the same time, it is worth noting that major international hotel groups are in the process of selecting next-generation hotel information systems. The successful batch launch of pioneers Intercontinental Group, Peninsula Group, and Langham Hotels Group's SEP has had an obvious demonstration effect on the industry. It is expected that more industry-leading hotel groups will make choices next year, and the company is expected to use its own benchmarking effect to take an advantage in the selection of next-generation hotel information systems for major international hotel groups.

Launched HALO, the industry's first intelligent AI engine, to accelerate the advance of intelligent management. To help the industry reshape operating models and business innovation, the company officially launched HALO, an intelligent AI engine for the wine travel industry. At present, HALO has initially achieved seamless integration with its products such as Infrasys Cloud POS, Cambridge Cloud PMS, and Shiji Data Platform, and has successfully connected with many mainstream models at home and abroad.

HALO uses advanced AI models and algorithms. On the one hand, processes can be fully automated, and intelligent report analysis, intelligent customer service, intelligent travel management, intelligent front desk reception, intelligent itinerary planning, etc. can be carried out in the system; on the other hand, HALO can help industry users intelligently predict key business data, such as number of nights in hotels, passenger traffic in scenic spots, restaurant sales, product sales, etc. As one of the core platforms for Shiji's overall product and system ecosystem infrastructure, HALO will help Shiji products further integrate AI technology in future development, bringing new growth opportunities.

Investment advice: Hotel IT systems are becoming cloud-based. As a benchmark for domestic cloud leaders to expand overseas, the company has received major orders from intercontinental and peninsulas, which has strong exemplary significance and long-term impact. Due to the high initial investment in cloud business development, the company's performance is under pressure in the short term, but SaaS transformation is an important step in the company's development, and it is expected to open a new chapter of development after successful transformation. At the same time, the company launched the industry's first AI engine, which has had a profound impact and is expected to accelerate its own business development. The company's net profit for 2023-2025 is estimated to be -0.89/1.50/346 million yuan, corresponding to the 2024-2025 PE of 146X and 63X, maintaining the “recommended” rating.

Risk warning: Competition in the industry is intensifying, new business is uncertain, and the pace of policy is uncertain.