Incident: Mingyuanyun announced 23-year results, achieving revenue of 1.64 billion yuan (YoY -9.7%), mainly because the domestic housing market is still in the adjustment stage, and signing a new contract in '23 requires a certain transformation cycle.
Achieved gross profit of 1.03 billion yuan (YoY -11.9%), corresponding to a gross profit margin of 79.5%, a year-on-year decrease of 2 pct; net loss of 587 million yuan, a year-on-year reduction of 49.4%; adjusted net loss of 170 million yuan, a sharp decrease of 72.9% year-on-year, mainly due to continuous cost reduction and efficiency improvement results. The company has abundant cash reserves. As of December 31, 23, the company's cash, cash equivalents and term deposits were approximately $4.392 billion; the company plans to pay a special dividend of HK$0.1 per share for 23 years.
Comment: The revenue structure continues to be optimized, and revenue from project construction and asset management has maintained a high growth rate. Revenue from localized software and services was 301 million yuan (YoY -22.8%), and revenue from cloud services was 1.34 billion yuan (YoY -6.2%), accounting for 81.6% of total revenue; the company's customer base gradually switched to state-owned enterprises. The digital transformation goals of the state-owned enterprise customer base were clear, and the IT budget was sufficient. 1) Customer relationship management revenue was 946 million yuan (YoY -9.2%), of which Yunke product revenue was 869 million yuan (YoY -4.9%). Affected by the overall sales environment in the residential market, the number of sales offices equipped with Cloud Guest in China fell 5.5% year on year to 11,601, and the customer unit price was 75,000 yuan/unit, up only 1.4% year on year. The main reason was that new customers continued to purchase additional Cloud Guest functional modules, but some existing private developer customers were under cash flow pressure, which led to a drop of contract renewal prices for some projects; the customer account retention rate for Yunke products was 80%, down 2 pct year on year. 2) Project construction revenue of 157 million yuan (YoY +32.7%). Affected by the investment environment in the housing market, the total number of domestic construction sites equipped with project construction products was 6876 (YoY -3.8%). Due to the more clear digital budgets for state-owned enterprise customers, the unit price for construction site customers increased to 23,000 yuan/unit (YoY +35.3%), and the project construction customer account retention rate was 80%, down 4 pcts from the previous year. 3) Total revenue from asset management & operation is about 887 million yuan (YoY +42%), and the total real estate property area managed by products is 470.69 million square meters, an increase of 5.3% over the previous year. It is mainly due to state-owned enterprises in various regions strengthening their inventory of real estate resources. 4) Skyline PaaS platform product revenue of 149 million yuan (YoY -27.6%). Affected by the market environment, some residential developer customers reduced their procurement demand for Skyrim products and services due to cash flow issues. In 23 years, the Skyrim PaaS platform has served more than 2,300 customers, empowered about 4,833 certified zero-code/low-code/data developers, and established more than 80 connectors for technical partners in the real estate industry.
The results of reducing costs and increasing efficiency in 23 years have been remarkable, and the AI model has liberated the productivity of the platform. Expenses for the period after excluding stock payments in '23 were 1.67 billion yuan, a year-on-year decrease of 16.9%. Among them, management expenses, R&D expenses, and sales expenses decreased by 20.6%, 22.4%, and 11.7% respectively; the per capita output value reached 557,000 yuan in '23, an increase of 15.8% over the previous year. The company combines generative AI technology to launch AI applications for real estate marketing, such as AI creative factories and AI digital people, to help customers improve marketing productivity. In addition, the Skyline PaaS platform has also integrated mainstream AI models at home and abroad. It can quickly generate objects such as data models, pages/forms, and business processes based on natural semantics, and supports zero/low code correction requirements.
Profit forecasting, valuation and rating: The company continues to expand industrial infrastructure and stock markets, optimize product layout, focus on the customer base of state-owned enterprises, and drive upward profit inflection points by reducing costs and increasing efficiency. As real estate demand will take time to recover, the 24-25 revenue forecast was lowered to 165/1.76 billion yuan (-5%/-2% compared to the previous forecast), adding an additional 26-year revenue forecast of 1.84 billion yuan; considering that it will take time to improve human efficiency, AI R&D investment was strengthened, and the 24-25 non-GAAP net profit forecast was lowered to 0.15/057 million yuan (-93%/-84% from the previous forecast), and an additional 26-year non-GAAP net profit forecast of 108 million yuan was added. Maintain an “Overweight” rating.
Risk warning: customer growth falls short of expectations; real estate recovery falls short of expectations; competition in the cloud services market intensifies.