Event: On March 25, Hang Seng Electronics released its 2023 Annual Report. Throughout 2023, the company achieved operating income of 7.281 billion yuan, an increase of 11.98%; net profit to mother of 1,424 billion yuan, an increase of 30.50% year on year; deducted non-net profit of 1,448 billion yuan, an increase of 26.51% year on year.
The company's revenue and profit performance was impressive, with growth in all business segments: judging from the company's overall performance, in 2023, the company achieved operating income of 7.281 billion yuan, an increase of 11.98%; net profit to mother of 1,424 billion yuan, an increase of 30.50% year on year; deducted non-net profit of 1,448 billion yuan, an increase of 26.51% year on year. In 2023, in a situation where market competition continues to intensify, the company finally achieved steady growth by adjusting its management policy in a timely manner. By business, in 2023, the company's wealth technology services achieved revenue of 1,734 billion yuan, an increase of 4.27%; asset management technology services achieved revenue of 1,712 billion yuan, an increase of 9.27%; operation and institutional technology services achieved revenue of 1,436 billion yuan, an increase of 14.32%; risk and platform technology services achieved revenue of 509 million yuan, an increase of 19.06% year on year; data service business achieved revenue of 385 million yuan, a year-on-year increase of 19.27%. At 12.48%, corporate finance, insurance core and financial infrastructure technology services achieved revenue of 700 million yuan, an increase of 23.10% over the previous year. From a business perspective, the company's various businesses achieved varying degrees of growth.
Management and R&D expenses increased, and the company's overall profitability increased: For the whole of 2023, the company's sales expenses, management expenses, and R&D expenses were 5.90/9.53pct/2.661 billion yuan respectively, up 4.33pct/9.53pct/13.42pct from the previous year; the year-on-year increase in management and R&D expenses was mainly due to the increase in the company's personnel remuneration, travel and business expenses. On the profitability side, the gross margin of the company's main business in 2023 was 74.85%, an increase over the past two years, and continues to maintain market competitiveness. Looking specifically at several major businesses, the gross margin of Fortune Technology services increased 2.95% year on year, gross margin of operation and institutional services increased 0.07% year on year, and gross margin of asset management technology services decreased by 1.55% year on year. Overall, although the profit performance of asset management technology services has declined, the company's overall performance is still improving.
Products continue to be launched, and market demand for some products has not been fully released: in terms of implementation of key products, the company achieved excellent results in 2023. On the asset management technology side, the maturity of O45 products has been further improved, and projects for leading funds and asset management companies have been completed; market demand for Fortune Tech's innovative products has slowed down and competition has intensified, but UF3.0 has signed 2 new strategic customers and completed projects at 2 leading brokerage firms, and the memory trading version has been launched for customers. Other key products such as integrated financial management, TA, valuation, allocation and trading terminals, customer marketing, algorithm services, and risk management have also achieved encouraging results. SAAS business and Hang Seng Juyuan's data services have achieved faster growth. In terms of Xinchuang, by the end of the reporting period, all of the company's main products had been adapted to Xinchuang, helping more than 70 financial institutions to independently innovate and upgrade their core business systems.
Profit prediction and investment rating: The company is deeply involved in the financial industry, is committed to providing customers with one-stop solutions, responds positively to digital transformation trends, and successively lays out in artificial intelligence and other fields. We are optimistic about the company's development and forecast that in 2024-2026, the company will achieve revenue of 8.079 billion yuan, 9.046 billion yuan, 10.222 billion yuan; net profit to mother of 1,702 billion yuan, 2,339 billion yuan; EPS 0.90, 1.07, 1.23, PE 34.7X, 29.1X, 25.3X, maintaining a “buy” rating.
Risk warning: Industry competition intensifies; industry prosperity falls short of expectations; policy orientation falls short of expectations: technological innovation progress falls short of expectations.