Incidents:
The company released the “2023 Annual Report” after closing on March 24, 2024.
Comment:
Performance achieved steady growth, and the quality of development was further improved in 2023. In a situation where changes in the external environment exceeded expectations and market competition continued to intensify, the company promptly adjusted its management policy and strived to achieve steady growth. The company achieved annual revenue of 7.281 billion yuan, up 11.98% year on year; realized net profit of 1,424 billion yuan, up 30.50% year on year; realized net profit after deduction of 1,448 billion yuan, up 26.51% year on year; gross margin of main business was 74.85%, up from the past two years, and continued to maintain market leadership and product competitiveness advantages. The company continued the trend where the revenue growth rate was higher than the growth rate of costs, and the quality of development was further improved. Among them, sales expenses decreased by 4.33% year on year, management expenses increased 9.53% year on year, and financial expenses decreased by 192.04% year on year.
Key products were successfully implemented, and all main products were successfully implemented by Xinchuang. The company achieved excellent results: O45 product maturity was further improved, leading fund and asset management company projects were completed; UF3.0 signed 2 new strategic customers and completed projects at 2 leading brokerage firms; and the memory trading version was launched for customers. Other key products such as integrated financial management, TA, valuation, allocation and trading terminals, customer marketing, algorithm services, and risk management have also achieved encouraging results. SAAS business and Hang Seng Juyuan's data services have achieved faster growth. In terms of Xinchuang, by the end of 2023, all of the company's main products had been adapted to help more than 70 financial institutions to independently innovate and upgrade their core business systems; in the operation of the Xinchuang ecosystem, contracts were signed with relevant strategic partners, and the “White Paper on Information Technology Application Innovation in the Financial Industry” was published.
Investment in R&D continues to increase. In 2023, LightGPT, a major self-developed financial model, opened for public testing, the company invested a total of 2,661 billion yuan in R&D expenses, accounting for 36.55% of revenue, an increase of 13.42% over the previous year; the company had 9535 product technicians, accounting for 72.3% of the total number of people in the company.
Using the Light technology platform as the foundation, we will further develop distributed low latency platforms to achieve industry-leading performance such as single transaction latency and concurrent throughput in transaction processing scenarios; agile business delivery platforms, based on low code capabilities, to improve efficiency and help customers innovate quickly; and high-performance data weaving platforms to achieve risk control and settlement in data processing scenarios to help customers reduce costs and increase efficiency. In June 2023, the company released WarrenQ, the next-generation investment and research opening method, Photon, a financial intelligence assistant, and LightGPT, a major model for the financial industry. In October, the latest capability upgrade results and application products for LightGPT, a major financial model, were released, and it was announced that the public beta will be officially opened.
Profit forecasting and investment advice
With the healthy development of China's capital market, the financial IT industry is expected to usher in a high growth cycle. The company is expected to fully benefit and continue to grow. The company's revenue for 2024-2026 is estimated to be 82.47, 92.43, and 10.221 billion yuan, net profit to mother of 17.18, 19.63, and 2.90 billion yuan; EPS of 0.90, 1.03, 1.15 yuan/share; corresponding PE is 25.92, 22.68, 20.33 times. Maintaining a “buy” rating considering the boom in the industry and the company's room for continued growth in the future.
Risk warning
Risk of brain loss; risk of market competition; risk of technological innovation, etc.