Incidents:
On March 24, 2024, the company released its 2023 annual report: in 2023, the company achieved operating income of 7.281 billion yuan, a year-on-year increase of 11.98%; net profit of 1,424 billion yuan, up 30.5% year on year; net profit after deducting non-return of 1,448 billion yuan, up 26.51% year on year; 2023 Q4 achieved revenue of 2,914 million yuan, up 5.36% year on year; net profit without return to mother was 818 million yuan, a year-on-year increase of 24.29%; net profit without return to mother was 911 million yuan, up year-on-year increase 11.86%
Investment highlights:
The wealth and asset management business remains steady, and the institutional, risk and data business is growing rapidly. The company adheres to the policy of “only making first-class products” and focuses on the core product line. Key products such as UF3.0 and O45 have achieved excellent results. The revenue in 2023 is broken down by business:
1) Fortune Technology's revenue was 1,734 billion yuan, an increase of 4.27% over the previous year. The reason for the slowdown in growth is a slowdown in market demand for existing products+ demand for credit innovation products has not been fully released; UF3.0 has signed 2 new strategic customers+ completed 2 leading brokerage projects;
2) Asset Management Technology's revenue was 1,712 billion yuan, an increase of 9.27% over the previous year. O45 has completed full-scale Xinchuang R&D, signed 53 new customers, and completed 24 customers; 3) Operating and institutional revenue was 1,436 billion yuan, an increase of 14.32% over the previous year. The new generation of TAs signed nearly 100 new customers and was completed; 18 Internet TAs have been launched, the valuation system has signed more than 30 new contracts, and the leading fund customers have replaced friends and merchants.
4) Risk and platform revenue of 509 million yuan, a year-on-year increase of 19.06%, maintaining a good growth trend;
5) Data service revenue was 385 million yuan, an increase of 19.27% over the previous year. More than 50 new customers were added to the database, basic data products grew steadily, and large-scale model application products were co-built with multiple customers; 6) Innovative business revenue was 556 million yuan, an increase of 12.48% over the previous year. Yunyi Wealth Asset Management Cloud's business is steady, and existing customers increase stickiness and develop new customers;
7) Corporate capital, insurance core and financial infrastructure revenue was 700 million yuan, an increase of 23.10% over the previous year.
The corporate treasury business focused on speeding up the launch, and a breakthrough was achieved in the payment clearing business.
Improving quality and efficiency has driven a steady increase in profitability. Additional incentives have been added to strengthen development confidence. The gross profit margin in 2023 was 74.84%, up 1.28 pct year on year; the net interest rate was 19.82%, up 2.6 pct year on year; the main reason was that the company strengthened fine management to improve quality and efficiency. In 2023, the total number of people in the company fell by 158, generating revenue per capita of 552,100 yuan, up 13% year on year; per capita profit generation was 108,000 yuan, up 32% year on year; sales/management expenses ratio was 8.11%/13.09%, down 1.38/0.29pct year on year. The company's equity incentive in 2023 strengthens confidence in high-quality development. The incentive is divided into 3 periods from 2023-2025. The unlocking conditions are that the net profit growth rate of non-return to mother is not less than 10% based on the previous year.
In-depth financial digital intelligence layout, closely following the big model empowering the industry's development opportunities. In 2023, the company released LightGPT, the financial intelligence assistant Photon, and the intelligent investment and research platform WarrenQ. The company uses the Light technology platform as the foundation to further develop distributed low latency platforms, agile business delivery platforms, and high-performance data weaving platforms to build a technology moat and achieve industry leadership. In 2023, the company invested a total of 2,661 billion yuan in R&D expenses, accounting for 36.55% of revenue, an increase of 0.47pct over the previous year; the company rose to 22nd place in the IDC Fintech 100 list, ranking first in Asia, and reached a new high.
Profit forecast and investment rating: The company is a leading IT leader in securities & asset management. It has a stable advantage, focuses on first-class products, and improves quality and efficiency. In 2024-2026, we expect the company's net profit to be 1,763/19.85/2.230 billion yuan, EPS of 0.93/1.04/1.17 yuan/share, respectively, and the PE corresponding to the current stock price is 25.80/22.91/20.39 X, respectively, to maintain a “buy” rating? Risk warning: Macroeconomics affects downstream demand, Xinchuang's progress falls short of expectations, technological iteration and upgrading falls short of expectations, increased market competition, risk of brain loss, etc.