Incident: Yuxin Technology released its 2023 annual report. The company achieved revenue of 5.204 billion yuan, up 21.45% year on year; realized net profit of 326 million yuan, up 28.76% year on year; realized deducted non-net profit of 316 million yuan, up 29.34% year on year; achieved net operating cash flow of 447 million yuan, up 155.08% year on year; and the company's overall gross profit margin was 25.94%, down 1.07 percentage points year on year. Looking at 2023Q4 alone, the company achieved revenue of 2.119 billion yuan, a year-on-year increase of 30.61%; realized net profit of 166 million yuan, an increase of 18.36% over the previous year; and realized deducted non-net profit of 154 million yuan.
Non-net profit after deduction increased, and integrated business led to overall revenue growth. In 2023, the company achieved net profit of 326 million yuan, an increase of 28.76% over the previous year. Excluding non-recurring profit and loss, net profit after excluding share payment expenses was 362 million yuan, an increase of 65.49% over the previous year. Furthermore, in terms of revenue, the company's overall revenue in 2023 reached a record high of 5.204 billion yuan. By product, the company's software business achieved revenue of 3.322 billion yuan, an increase of 5.54% over the previous year. Among them, the revenue of large commercial banks and joint stock banks in China grew steadily, contributing 51.04% of the company's software revenue; small and medium-sized banks and agricultural credit cooperatives contributed 33.95% of software revenue; and non-bank financial institutions, foreign banks, and other financial customers accounted for 15.01% of software revenue. Furthermore, by the end of 2023, the company's new software business orders increased by 5% year-on-year in 2023. In terms of the integrated business of Xinchuang, thanks to the promotion of financial credit, the company achieved revenue of 1,720 billion yuan, an increase of 77.47% over the previous year. In terms of innovative business, the company achieved revenue of 157 million yuan, a year-on-year decrease of 4.53%.
In terms of gross margin, the company's overall gross margin declined in 2023. We think it was mainly due to the increase in the share of revenue from the Shinchuang integrated business with lower gross margin. If you look at the breakdown, the company's gross margin of the software business in '23 was 31.13%, up 1.71 percentage points from the previous year; in addition, the gross margin of the company's Xinchuang integrated business also increased to 10.48% in '23.
Continued refined operation, and the human efficiency index reached a record high. In 2023, in terms of expenses, the company's sales expenses, management expenses, and R&D expenses were 1.61/3.02/568 million yuan respectively. The year-on-year changes were +14.75%/+25.82%/+13.63%, respectively. Among them, the rapid growth rate of management expenses was mainly due to share payment expenses. In terms of personnel efficiency, by the end of 2023, the total number of people in the company was 12,547, down 601 from the end of 2022; in terms of labor efficiency, the company's per capita revenue in 2023 reached 414,700 yuan, reaching a new high since the company went public.
Focusing on “software business+innovative business+overseas business”, AI empowerment is expected to improve quality and efficiency. In 2023, the company's overseas business progressed steadily. Existing projects were tested online, and orders for the second and third phases were signed. In terms of market expansion, thanks to accumulation over the past few years, the company received good feedback in markets such as Singapore, Cambodia, Indonesia, and Hong Kong, and actively promoted the signing of new projects. In terms of innovative business, the company's two operations in Indonesia have entered a stable period of operation and generated revenue.
The company is also actively exploring and exchanging innovative business opportunities in other ASEAN countries, and will replicate Indonesia's success stories to other regions and countries. In terms of artificial intelligence, the company pioneered the launch of the first batch of large-scale model application products and solutions for the financial industry through independent research and development, including 4 application-level products and 1 development platform. We believe that in the future, the company will mainly focus on the three aspects of software business, innovative business, and overseas business, and combine AI technology to improve quality and efficiency, and is expected to show stronger growth momentum in the future.
Profit forecast: We expect EPS to be 0.61/0.74/0.91 yuan in 2024-2026, and the corresponding PE will be 22.71/18.69/15.36 times.
Risk warning: Market competition intensifies, downstream demand falls short of expectations, and Xinchuang's progress falls short of expectations.