The 2023 forecast results are in line with our expectations

Saiyi Information Announces 2023 Results Forecast: It is expected to achieve revenue of 2,385 billion yuan to 2,612 billion yuan in 2023, with a median forecast value of 2.498 billion yuan (year-on-year increase of 10.0%); estimated net profit of 2.60 to 300 million yuan, with a median forecast value of 280 million yuan (year-on-year increase of 12.2%); net profit without return to mother is 226 million yuan to 266 million yuan, with a median forecast value of 246 million yuan (year-on-year increase of 9.5%). Looking at a single quarter: Based on the median forecast, 4Q23 is expected to achieve revenue of 816 million yuan, an increase of 34.8% year on year; net profit to mother was 152 million yuan, up 56.6% year on year; net profit after deducting non-return to mother was 137 million yuan, up 59.8% year on year. The 4Q23 company accelerated the delivery of ongoing orders and achieved high quality and efficiency of operations. Revenue and profit increased rapidly year over year, and the performance was in line with our expectations.

Key points of interest

2023 review: Market demand is under pressure, and customers of central and state-owned enterprises are expanding smoothly. In 2023, in an industry environment where the recovery in the manufacturing boom fell short of expectations and downstream customers' digital spending was delayed, overall market demand was under pressure. The company focuses on expanding leading customers in booming industries such as photovoltaics and new energy, and initially achieved breakthroughs with central state-owned enterprise customers such as operators and energy. 4Q23 accelerates the delivery and receipt of orders in progress. We expect revenue to grow rapidly by nearly 35% in a single quarter, and drive annual revenue to achieve a year-on-year growth rate of about 10% year-on-year. In terms of costs and expenses, 2H23 continues to promote open source savings, quality and efficiency. We expect 4Q23 to achieve effective control of costs and expenses and achieve rapid release of profits. On the order side, we expect the company's new orders to grow at a year-on-year rate of about 10% in 2023, with orders from central state-owned enterprises breaking through.

2024 outlook: There are plenty of opportunities for localization, and the improvement of quality and efficiency may continue. Looking ahead to 2024, we believe that there are broad opportunities for localization in the Pan-ERP sector: 1) On the MetaERP side, the benchmark customer project will be launched in 2023. We believe that 2024 is expected to achieve initial large-scale expansion, and the company is expected to fully benefit as a core implementation partner; 2) In 2023, the company completed the acquisition of Sinobo and entered the operator central state-owned enterprise market. We believe that central state-owned enterprises in the energy, electricity, and operator industries have sufficient IT investment.

We judge that the company is expected to continue to expand pan-ERP incremental orders from central state-owned enterprises. In 2024, revenue from the central state-owned enterprise sector may account for more than 20% of the company's revenue. On the cost and expense side, the company plans to continue to control personnel growth in 2024. We determine that the profit side of the company's growth rate may exceed the revenue side.

Profit forecasting and valuation

Considering that the company accelerated order delivery and acceptance in 4Q23, we raised our 2023 revenue by 3.9% to 2,493 billion yuan, keeping our 2023 profit basically unchanged; considering that industry demand is under pressure, we lowered 2024 revenue/profit 5.6%/8.8% to 27.53/324 million yuan respectively; and introduced 2025 revenue/profit of 30.85/376 million yuan for the first time. Considering the recent decline in the industry's valuation center, the target price was lowered by 23.9% to 19.76 yuan (switching the valuation to 25 times 2024 P/E). There is 22.7% room to rise from the current price. The current price corresponds to 20.4/17.6 times the 2024/2025 P/E, maintaining an outperforming industry rating.

risks

The expansion of central state-owned enterprises fell short of expectations; the expansion of new industries fell short of expectations; cooperation with Huawei fell short of expectations.