Introduction to this report:
The company is taking a series of measures to deepen the strategic transformation of subscription priority and channel priority. The phased results have been remarkable. Combined with the gradual expansion of AI products, the future performance growth rate may exceed expectations.
Key points of investment:
Covered for the first time, an increase in holdings rating is given. The company's EPS is expected to be -1.08/-0.12/0.45 yuan in 2023-2025, respectively. The target price is 101.76 yuan, corresponding to 14 times PS in 2024.
The dual transformation strategy is progressing smoothly, verifying the long-term development logic. With the further expansion of the AI application ecosystem at home and abroad, future performance flexibility will exceed expectations. The market believes that the company's revenue growth rate is declining and losses are widening, and growth is worrying. We believe that the company is taking a series of measures to deepen the strategic transformation of subscription priority and channel priority. Considering the development of new customers in the early stages of transformation, and the large investment in R&D and marketing network layout to guide procurement, maintenance and upgrade services, performance is under pressure in the short term. However, phased results of subscription and channel transformation have already been achieved. Combined with the gradual deployment of AI products, future performance flexibility may exceed expectations.
Core logic: The transformation of products to the cloud is progressing rapidly, and competitiveness is prominent under the power of AI. The company completed the packaging and upgrade of the core product line, and released new product lines PDFEditor Suite and PDF Editor Suite Pro, which integrate desktop, mobile and cloud services, and combine cloud service functions such as electronic signatures and AI assistants to promote product cloud transformation, while driving subscription transformation through the family bucket model. In addition, in terms of sales, subscription transformation marketing plans are also gradually being implemented in a steady, orderly manner. A number of measures were taken. According to the company's performance report, ARR of about 249 million yuan was achieved in 2023, an increase of about 80% over the previous year. The annual subscription revenue ratio is expected to be about 35%, and the share of subscription revenue in a single quarter increased to about 40% in the fourth quarter of 2023. At the same time, the company is entering domestic B-side related industry applications, and new project areas will also contribute additional volume.
Catalyst: The subscription rate continues to increase, and the domestic version of the general AI assistant function is being filed
Risk warning: R&D results fall short of expectations, domestic market expansion falls short of expected risk