Event: On the evening of March 27, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 3.801 billion yuan, a year-on-year decrease of 11.94%; net profit to mother was 755 million yuan, an increase of 1,588.44% year-on-year, and the performance was in line with expectations.
Payment services and hardware overseas drove growth, and net profit to mother increased sharply year over year. 1) In 2023, the company achieved revenue of 3.801 billion yuan, a year-on-year decrease of 11.94%; achieved gross profit of 1,475 billion yuan, a year-on-year increase of 35.22%; realized net profit of 755 million yuan, an increase of 1,588.44%; realized net profit without return to mother of 700 million yuan, an increase of 279.84% year on year; performance was in line with expectations. 2) The company's revenue declined in 2023, mainly due to a year-on-year decline in receipt business transaction flow due to license renewal factors; the significant increase in net profit attributable to mother was mainly due to the lower net profit base due to impairment of goodwill and the impact of capital refund expenses in non-operating expenses in 2022. Excluding the effects of the above factors, the company's net profit growth rate in 2023 was about 110.09% year-on-year.
The payment license was successfully renewed, and domestic channels were further improved. In July 2023, Jialian Payment's “Payment Business License” was successfully renewed, eliminating key risks affecting the company's billing business operations. Taking this opportunity, Jialian Pay gradually increased investment in agent channels, improved the construction of a domestic direct management network, and deepened cooperation with banking institutions. In the fourth quarter, Jialian Pay's billing product line shipped in large quantities, and monthly transaction volume increased sequentially in December. Up to now, Jialian Pay has reached cooperation with 400 banks, covering state-owned banks, joint-stock commercial banks, urban commercial banks, and agricultural credit cooperatives. The number of Jialian Payment branches reached 36, and the direct management channels covered 178 cities across the country, and initially built a direct management network covering the whole country.
Continued resource investment in the AI field was increased, and overseas business breakthroughs continued. 1) AI business: ① The company actively explores application scenarios of AI technology to empower the company's business. The participating subsidiaries successfully launched a variety of popular applications in overseas markets, and achieved obvious commercialization results, driving the company's investment income to increase year-on-year. ② The company and Shanghai Weisha Network Technology Co., Ltd. jointly funded the establishment of Shanghai Shiyi District Information Technology Co., Ltd. to set up an artificial intelligence research team, carry out research and development of General Purpose AI Agent (General Purpose AI Agent) technology, develop multi-modal AI products, and explore various solutions that enable AI technology to operate efficiently, which will bring new business growth opportunities to the company. 2) Overseas business: ① The basic team for the company's cross-border business group has been formed, the payment service product system for the cross-border and overseas markets has been initially set up, and the first overseas local transaction receipt has been completed. At the same time, the company is also actively laying out payment service services around scenarios such as cross-border e-commerce and cross-border trade. Paykka, a newly launched cross-border payment product, already supports payment collection services in 10+ mainstream global currencies and 150+ global billing services. ② The company's revenue in the overseas market of electronic payment devices continued to grow. The gross profit of the overseas market of electronic payment devices increased by 18.70% year on year; the overseas market achieved shipments of 4.4639 million units, an increase of 48.63% year on year.
Maintain a “buy” rating. We expect the company's profit forecast for 2024-2026 to be 45.56/53.47/6.057 billion yuan, and net profit to mother of 9.73/11.96/1.75 billion yuan, corresponding to the closing price on March 28, 2024, reaching 12.4/10.1/8.7 times PE, respectively, and maintaining a “buy” rating.
Risk warning: Technology iteration falls short of expectations, economic downturn exceeds expectations, and industry competition intensifies.