Performance performance
On March 29, 2024, the company released the 2023 Annual Report [Overall Performance]
(1) In 2023, revenue of 9.043 billion yuan increased 20.15% year over year, net profit to mother of 977 million increased 17.80% year over year, net profit after deducting non-return to mother of 818 million yuan, up 19.61% year on year.
(2) 23Q4 revenue was 3.30 billion yuan, up 20.25% year on year, net profit attributable to mother was 224 million, up 38.48% year on year, after deducting net profit of 151 million yuan, up 77.10% year on year.
[Business Segmentation]
Revenue from the fintech sector in '23 was 6.035 billion, up 28.48% year on year, and revenue from the urban intelligence sector was 3.0 billion yuan, up 6.32% year on year.
Domestic revenue in '23 was 7.423 billion, up 15.09% year on year, and overseas revenue was 1.62 billion yuan, up 50.47% year on year.
[Gross profit margin, cash flow]
The gross profit margin for 23 was 35.88%, a year-on-year decrease of 2.34pct; the 23Q4 gross profit margin was 32.59%, and a year-on-year decrease of 1.27pct;
Net cash flow from operating activities in '23 was $1,503 million, a year-on-year decrease of 13.55%; in 23Q4, net cash flow from operating activities was $2,294 billion, a decrease of 1.72% year-on-year.
[Fee rate]
In 23, the sales/management/R&D expense ratio was 8.01%/5.85%/9.58%, the sales expense ratio decreased by 1.04 pct year on year, the management expense ratio decreased by 0.21 pct year on year, and the R&D cost rate increased by 0.03 pct year on year.
23Q4 sales/management/R&D expense ratio was 8.68%/5.58%/9.81%, sales expense ratio increased by 0.1 pct year on year, management cost ratio decreased by 0.31 pct year on year, and R&D cost ratio increased by 1.35 pct year on year.
Performance reviews
The company's cornerstone business, the fintech sector grew rapidly: Fintech, as the company's cornerstone business, achieved revenue of 6.035 billion in 23 years, an increase of 28.48% over the previous year. 23Q4 The company's overall revenue reached 3.3 billion yuan, an increase of 20.25% over the previous year. The company's leading position in smart financial equipment continues to be stable. It has ranked first in the domestic smart financial equipment market share for 16 consecutive years. At present, the company has achieved 100% coverage of first-tier and second-tier cities across the country, and the total number of service devices exceeds 260,000 units. We believe that under the guidance of the Xinchuang policy, we are expected to achieve continuous and steady growth based on the company's leading position in the industry and the ability to fully develop the industry chain.
Overseas business growth is impressive, and technology+ brands are expected to continue to open new routes overseas: in '23, the company's domestic revenue was 7.423 billion, up 15.09% year on year, and overseas revenue was 1,620 billion yuan, up 50.47% year on year. At present, the company has eight branches in the international market, covering the five major regions of Asia Pacific, the Middle East, Europe, Africa and America. The products and services have covered more than 110 countries and regions around the world, providing fintech products and services to more than 1,200 financial institutions. Under the trend of continuous expansion, the company's business is expected to take root in key overseas locations and achieve rapid growth through technology+brand.
Increased investment promotes strategic upgrading: the company's sales expenses increased 6.33% year on year in '23, and R&D expenses increased 20.52% year on year. The company actively promotes AI around the annual development theme of “consolidating core digital technology, promoting deep integration of numbers and reality, and intelligently drawing a new blueprint for the digital industry ecosystem”, and continues to expand its territory, continue to be deeply involved in AI technology, develop the artificial intelligence AIcoreSystem big data platform, and the “Wangdao” big model, etc., to lay a solid foundation for the company's subsequent development.
The acquisition of 42.74% of China Digital Zhihui's shares is deeply involved in the data element industry: the company completed the acquisition of 42.74% of China Digital Smart Hui's shares on December 26, 2023. China Digital Smart Hui drove credit reporting product upgrades through technology introduction, and built an intelligent data mining system integrating data collection, data standard establishment, and data thematic modeling to artificial intelligence technology. Combining the requirements of data security compliance and commercial confidentiality, it is an important strategic move for Radio and Television Transportation to comprehensively lay out the data element business; Radio and Television Transportation is an important strategic initiative for Radio and Television Transport to comprehensively lay out the data element business; Radio and Television Transport is an important strategic initiative for Radio and Television Transport to comprehensively lay out the data element business; State-owned enterprises in Guangzhou have been actively undertaking digital city transformation projects in Guangdong Province and the whole country, and participating in the construction of digital governments in various regions. At the same time, by participating in the Guangzhou Data Exchange, we have fully laid out the data element business, built a full chain of data valuing, and continued to build core competitiveness in data processing, operation, and trading. At present, Guangzhou Data Group has been established and is a wholly-owned subsidiary of the parent company Guangzhou Radio Group. Currently, the company has implemented several public data operation projects.
Profit forecasting and valuation
We expect the company to achieve revenue of 105.51/126.13/15.360 billion yuan in 2024-2026, with year-on-year growth rates of 16.67%/19.55%/21.77% respectively; corresponding net profit to mother of 11.84/14.38/17.72 billion yuan, respectively, with year-on-year growth rates of 21.23%/21.42%/23.26%, corresponding EPS of 0.48/0.58/0.71 yuan, corresponding PE 25/21/17 times. Maintain a “buy” rating.
Risk warning: The data element policy falls short of expectations, the promotion of the Xinchuang policy falls short of expectations, overseas promotion falls short of expectations.