Core views:
Revenue growth was slightly lower than expected. The company released its 2023 annual report. During the reporting period, the company achieved revenue of 7.281 billion yuan, an increase of 11.98%, slightly lower than expected; net profit to mother was 1,424 billion yuan, an increase of 30.50%; after deducting non-net profit, it was 1,448 billion yuan, an increase of 26.51%.
High-quality development continues to advance, and a new generation of core products is gradually being launched. In 2023, the gross margin of the company's main business was 74.84%, up 1.28pct from 2022. The company's next-generation core products are gradually being implemented: 1.O45 completed full-stack Xinchuang R&D, further improved product maturity, signed 53 new customers, and completed 24 customers; 2. UF3.0: Signed 2 new strategic customers, completed projects at 2 leading brokerage firms, and completed the launch of the memory transaction version for customers.
Increase investment in R&D to maintain technological leadership, and continue to improve operational efficiency. In 2023, the company invested 2,661 billion yuan in R&D, and the R&D expenditure ratio was 36.55%, continuing to maintain technological leadership. The company's large model technology has been applied in technology platforms and related fields, and efficiency improvements have been achieved. Since per capita income generation reached an inflection point in 2022, per capita profit generation has also begun to pick up.
Optimistic about the development of the asset management technology industry for a long time, the AIGC wave has promoted the upgrading of the financial industry from digitalization to digital intelligence. In the long run, it is an inevitable trend for financial institutions to increase their IT investment. According to the McKinsey report, leading institutions have continued to increase investment in technical capacity building, achieving higher performance growth and higher profit margins. Intelligent technology will continue to empower the application of the financial industry throughout the value chain, and digital intelligence will become the driving force for high-quality development of the asset management industry. Currently, the company is rapidly incubating WarrenQChat and ChatMiner based on a self-built big language model, and the number of active WarrenQ users continues to grow. Large model application products have been co-built with many customers.
Profit forecasting and investment advice. We expect the company's 2024-2026 EPS to be 0.92/1.07/1.20 yuan/share, respectively. Considering that the company is a leading financial IT company, the company will be given 30 times PE in 2024, with a reasonable value of 27.53 yuan/share, maintaining the “gain” rating.
Risk warning. Capital market reforms fell short of expectations; the promotion of the company's new products fell short of expectations; and financial innovation fell short of expectations.