Brief performance review
On March 29, 2024, the company released its 2023 annual report. The company achieved revenue of 5.20 billion yuan in the full year of 2023, up 21.4% year on year; the company's gross profit increased 16.6% year on year, gross margin was 25.9%, down 1.1 pct year on year, mainly due to an increase in the share of system integration businesses with low gross margin. The company's net profit after deduction was 320 million yuan, up 29.3% year on year; net profit excluding share payments was 360 million yuan, up 65.5% year on year.
The company's revenue for the fourth quarter of 2023 was 2.15 billion yuan, up 30.6% year on year, mainly due to batch acceptance of system integration business in the fourth quarter; gross profit increased 23.9% year on year, gross margin was 23.5%, down 1.3 pct year on year; net profit after deduction was 150 million yuan, up 16.4% year on year.
Management analysis
By business: 1) The 2023 revenue of the software development business was 3.32 billion yuan, up 5.5% year on year, and new orders for the whole year increased 5% year on year; Q4 revenue fell 11.2% year on year, mainly due to delays in acceptance by some customers. Among them, the data business line is developing well. More than half of the new orders signed in '23 were Shincuang-related businesses. 2) The system integration business's revenue in 2023 was 1.72 billion yuan, up 77.5% year on year; Q4 revenue was 9.1 billion yuan, up 253.9% year on year, mainly due to acceptance by major customers such as CITIC, and is expected to continue to benefit from the deepening of financial credit innovation in 24 years. 3) The revenue of the innovative operation business in 2023 was 160 million yuan, a year-on-year decline of 4.5%. The company achieved cooperation between personal loans for non-performing assets and Xiamen Asset Management Co., Ltd., and reached in-depth cooperation with a commercial bank in a certain city in auto finance business operations. The two operations in Indonesia have also entered a period of stable operation and generated profits. It is expected that in the future, overseas travel and in-depth multi-business operations will be a booster for innovative business operations.
In terms of expenses, the sum of the company's costs and three fees in 2023 (excluding the impact of integration costs and share payment fees) was $3.30 billion, an increase of 4.7% over the previous year, which is slower than the revenue growth rate. Excluding integrated businesses, per capita revenue was 278,000 yuan, showing an upward trend in recent years.
On the AI side, the company cooperated with companies such as Huawei, Baidu, Tencent, and Zhipu to jointly promote AI solutions for the financial industry, including but not limited to supply chain finance, point chains, trusted computing, and compliance tokens. Currently, it has launched 4 application-level products, 1 development platform, and Yushin all-in-one computer.
Profit Forecasts, Valuations, and Ratings
Based on the company's 2023 annual report and expectations for steady growth in the industry, we expect the company's revenue from 2024 to 2026 to be 5.7.2/63.1/6.96 billion yuan, up 10.0%/10.2%/10.4% year on year; net profit to mother will be 3.6/4.2/4.9 billion yuan, up 11.9%/15.5%/16.0% year on year, corresponding to 25.7/22.2/19.2 times PE, respectively, to maintain the “buy” rating.
Risk warning
Business development falls short of expectations; industry competition intensifies; shareholders and executives risk reducing their holdings.