整体业绩表现：2023 年公司面临市场环境挑战，主动调整业务结构，营收增速短期承压，但利润端呈现稳健增长，其中，1）交易业务收入端基本持平，主要由于公司主动优化农业生产资料、交通出行、酒水饮料品类的业务结构，导致相关收入同比下降；2）服务业务收入端增速承压，主要由于商家解决方案业务策略调整导致收入同比下降，但一定程度带动业务毛利率提升。Incidents:
On March 27, 2024, the company released its 2023 financial report. In 2023, it achieved revenue of 82.43 billion yuan (YoY +0.4%), gross profit of 2.74 billion yuan (YoY +5.9%), net profit of 700 million yuan (YoY +25%), and net profit of 450 million yuan (YoY +41.7%). On May 5, 2023, the company completed the acquisition of Nanjing Haoxiangjia Engineering Group.
Investment highlights:
Overall performance: In 2023, the company faced challenges in the market environment, actively adjusted its business structure, and the profit side showed steady growth. Among them, 1) the revenue side of the transaction business was basically flat, mainly due to the company actively optimizing the business structure of agricultural production materials, transportation, alcohol and beverage categories, leading to a year-on-year decline in related revenue; 2) the revenue side of the service business was under pressure, mainly due to adjustments in merchant solutions business strategies, which led to a year-on-year decline in revenue, but to a certain extent, the gross margin of the business increased.
Trading business: The company's trading business revenue in 2023 was 81,618 billion yuan (YoY +0.5%), of which self-operated business revenue increased 0.5% to 81,616 billion yuan, mainly due to ① deepening cooperation between the company and leading brands in the consumer electronics category; however, it was partially offset by a decline in revenue in categories such as home appliances, agricultural materials, alcohol, home building materials, etc., the main reasons include the weak home appliance market, high upstream price fluctuations in the agricultural sector, low prosperity in the liquor and building materials industry, and the company actively adjusted the relevant business structure; ② active member retail stores Steady growth. By the end of 2023, the total number of registered member retail stores reached 237,000 (YoY +15%), achieving more than 90,000 active member retail stores (YoY +19%).
The gross margin of the trading business increased by 0.2 pct compared to the same period in 2022, mainly benefiting from business structure optimization in some categories.
Service business: The service business segment revenue in 2023 was 650 million yuan (YoY -17.6%), of which the store SaaS+ subscription business revenue reached 550 million yuan (YoY +5.3%), the company's cumulative SaaS+ subscribers reached 132,000 (YoY +15.6%), 48,000 paid SaaS+ users (YoY +61.4%), and merchant solutions revenue of 90 million yuan (YoY -64.5%), mainly due to ① the continuous improvement of the company's membership service capabilities, and 35 companies joined forces in 2023 The core leading brand factory launched more than 456 joint promotion activities. At the same time, it developed its own Qiancheng series of service products to create corresponding modules for the pain points of member retail stores. Through a flexible subscription model, the SaaS+ payment penetration rate reached 36% (YOY+10pct) in 2023. The gross margin of the service business increased by 13 pct compared to the same period in 2022, mainly due to strategic adjustments in merchant solution business strategies, which reduced some low-margin precision marketing and software customization services.
The equity incentive plan continues to advance: On April 6, 2023, the company announced the equity incentive plan, which will be implemented in batches from 2024 to 2028, with the company's net profit increasing by no less than 30% year-on-year each year as the main unlocking condition. On December 27, 2023, the company announced a new equity incentive plan, which was implemented in April 2027, based on the company's 2026 net profit increasing by more than 100% compared to 2023. A high degree of binding of interests between employees, the company and shareholders helps the company team to further improve efficiency and ensure medium- to long-term performance growth.
Profit forecast and investment rating: Due to the company's active adjustment of the business structure, we lowered our profit forecast. The company's revenue for 2024-2026 is $855/906/95.6 billion yuan respectively, net profit to mother is $5.8/6.9/85 billion, and the corresponding diluted EPS is $1.0/1.2/1.5. According to the SOTP valuation method, we gave Huitongda a total target market value of RMB 18.4 billion for 2023, corresponding to a target price of 33 yuan/HK$36, considering the company's steady profit side performance Furthermore, the optimization of the business structure provides a guarantee for long-term performance growth and maintains a “buy” rating.
Risk warning: Macroeconomic growth falls short of expectations; B2B industry growth falls short of expectations in sinking regions; SaaS promotion penetration in sinking regions falls short of expectations; growth in the number of member retail stores falls short of expected risk; AI application empowerment results fall short of expectations, etc.
