The company's recent situation
On March 23, the company issued the “Notice Concerning the Use of Overraised Capital for Foreign Investment”. It intends to use the overraised capital of 92.381 million yuan to acquire 38.2749% of the shares of Fuxin Kunpeng (Beijing) Information Technology Co., Ltd. (hereinafter referred to as “Fuxin Kunpeng”) (hereinafter referred to as “Fuxin Kunpeng”) (hereinafter referred to as the “acquisition”). If the acquisition is successfully completed, the company will hold 73.2436% of Foxin Kunpeng's controlling shares and will be included in the scope of the consolidated statement. The consideration for this acquisition corresponds to Foxin Kunpeng's valuation of about 236 million yuan.
reviews
PDF+OFD joined forces to consolidate its position in the layout office document market and broaden the entry into the localized market. Foxin Kunpeng is a leading domestic OFD layout office suite product development service provider. As one of the founders and core members, Foxin Kunpeng participated in the formulation of 20 national series of electronic document standards, including the national layout document standard OFD. As a leading manufacturer of typeset office document suite products, the company previously mainly engaged in software sales services with PDF editors and readers as the core. We believe that from the perspective of product collaboration, this acquisition will further expand the company's PDF+OFD layout business layout, enhance its influence on OFD national standards, and further consolidate the company's market-leading position in the field of layout office documents. According to the official website, Foxin Kunpeng has formed a domestic market layout of “5 R&D centers+16 sales and technical branches”. From an accessible market perspective, we believe this acquisition will help the company use Foxin Kunpeng's business and channel advantages to expand the localization market and form cross-sales of layout documents. According to the announcement, the terms of this acquisition include Foxin Kunpeng's performance promise that the average revenue growth rate for 2023-2025 is higher than 10%. If the acquisition is successfully completed, we expect it to have a positive impact on the company's revenue after the merger.
AIGC's capabilities continue to advance, waiting for results to be realized. In 2023, the overseas version of the PDF Editor, the company's core product, has integrated GPT in all three terminal forms of Editor PC, Mobile, and Cloud to achieve AI assistant functions. At the end of January 2024, the company announced that it had signed a software agency agreement with Dell, an important channel provider, to provide a PDF editor with integrated AI capabilities. Underlying AI model capabilities in the domestic market have evolved. Recently, the large model for long text interaction represented by Kimi has attracted more attention. We believe that as an upper level application provider, the company's domestic editor also has the ability to quickly integrate multiple underlying models. It is recommended to pay attention to the filing progress of its original Cloud version of the AI Assistant and the testing progress of multi-model access.
Profit forecasting and valuation
Considering that product collaboration is expected to have a positive impact on the revenue side, we raised our 2024 revenue forecast by 2.2% to 701 million yuan. In order to adapt to AICG's industry trends, the company continues to invest in R&D and sales, and the profit forecast for 2023/2024 was lowered from -0.63/034 billion yuan to -0.99/ -10 billion yuan. The 2025 revenue/profit forecast of $80/49 million was introduced for the first time. We maintain our outperforming industry rating and target price of 105 yuan (based on an estimated 13.7 times the 2024 market sales rate), with 23.8% upside compared to the current stock price. The current stock price corresponds to 11.1/9.5 times the 2024/2025 market-sales ratio.
risks
The progress of subscription and channelization transformation fell short of expectations; expenditure exceeded expectations; market competition intensified.