Core views

The company's FY23 revenue growth rate was under pressure in the short term, and profit increased slightly. FY23's revenue was 82.4 billion yuan (yoy +0.4%), of which transaction revenue was 81.17 billion yuan (99.1%, yoy +0.5%), and service business revenue was 650 million yuan (0.8%, yoy -17.6%); the pressure on the company's revenue growth rate was mainly due to contraction in the agricultural sector; FY23's adjusted net profit to mother was 448 million yuan (corresponding net profit margin was 0.54%, yoy +9.8%). In terms of trading business, supply-side companies have increased brand cooperation and made breakthroughs in their own brands; on the demand side, the number of company store members has grown steadily, and the electronics sector has performed well. The short-term decline in the SaaS business is mainly due to a decline in merchant solution revenue.

Brief review

Finance at a glance:

(1) Revenue: The growth rate is under pressure in the short term, mainly due to the contraction of the agricultural sector. FY23's revenue was 82.4 billion yuan, which was basically the same as the previous year, of which trading business revenue was 81.17 billion yuan (accounting for 99.1%, yoy +0.5%), and service business revenue was 650 million yuan (0.8%, yoy -17.6%); for the trading business, revenue mainly comes from self-operated businesses, including consumer electronics (revenue of 44.887 billion yuan, yoy +19%; mainly strengthening cooperation with leading brands), agricultural production materials (12.261 billion yuan, yoy -22.3%; mainly industry fluctuations As a result of stable volume and price decline), household appliances (12.313 billion yuan, yoy -11.5%), transportation (7.6 billion yuan, yoy -6.5%; mainly from low-margin traditional vehicles to provide spare parts for new energy vehicles), home building materials (2.99 billion yuan, yoy -6.3%; mainly due to the downturn in the real estate industry), alcohol and beverages (1,353 billion yuan, yoy -32%; mainly the decline in liquor retail sales); for the service business, revenue comes from the SaaS business of stores (yoy +5.5%), respectively Solution (yoy -64.5%).

(2) Profit: Gross profit increased slightly, and gross margin remained flat. FY23's adjusted net profit was 697 million yuan (corresponding profit margin was 0.84%, yoy +7.3%), adjusted net profit to mother was 448 million yuan (corresponding net profit margin was 0.54%, yoy +9.8%); the company's gross profit was 2,739 billion yuan (yoy +7.9%, corresponding gross margin was 3.3%, gross margin increased 0.1% year on year). The flat gross margin was mainly due to changes in the trading business structure and the reduction of part of the low margin business in the service business.

Business Overview:

(1) Trading business: The number of member stores is growing steadily, and cooperation with leading brands is strengthened. The company's trading business FY23 revenue was 82.4 billion yuan (of which self-operated business was 81,616 billion yuan, yoy +0.5%); the short-term pressure on revenue growth was mainly due to fluctuations in agricultural product terminal prices, which led to a sharp drop in the company's revenue. Currently, prices have gradually stabilized and are expected to remain flat for 24 years. Second, the alcohol and building materials sector is expected to continue to decline for 24 years due to the cyclical nature of the industry and the decline in consumption. On the supply side, the company continues to broaden brand cooperation and strengthen cooperation with leading companies in various industries; in addition, the company has made breakthroughs in the direction of its own brands, establishing such as Zhonghuida air conditioning, Huizong chemical fertilizer, etc.; on the demand side, the number of member stores has grown steadily. Currently, the number of registered member stores in the company is 237,000 (yoy +15%); the number of active member stores is 90,000 (yoy +19.1%); the revenue of consumer electronics, agricultural products, household appliances, transportation, home building materials, and beverages is respectively 448.87. 122.61, 123.13, 76, 29.9, 1,353 billion yuan.

(2) Service business: Store SaaS remains stable, and merchant services are under pressure in the short term. The company's H1 service business revenue was 654 million yuan (yoy -17.6%); of these, the store SaaS business was 562 million yuan (yoy +5.3%), and merchant solutions were 92 million yuan (yoy -64.5%). The decline in merchant solutions was mainly due to the company's business strategy adjustments and low margin precision marketing. The number of the company's subscribers continued to grow steadily. As of FY23, the total number of SaaS subscribers was 131,000 (yoy +15.6%); of these, the paid SaaS users were 480 million yuan (yoy +61.4%); in addition, the company actively deployed AI, mainly focusing on scenarios such as intelligent shopping guides, marketing planning, and digital people.

Financial forecast: We expect the company's revenue for 24 and 25 to be 85 billion yuan and 88 billion yuan, respectively, with year-on-year changes of 3.1% and 3.5%, respectively; adjusted net profit to mother is 470 million yuan and 4.9 billion yuan, respectively.

Risk warning: (1) insufficient demand for terminal products due to economic downturn; risk of falling SaaS business due to pressure on the rural economy; (2) risk of rising costs and falling gross profit facing trading business, risk of falling demand from lower-level wholesalers and stores in the trading business, risk of falling revenue falling short of expectations due to falling prices of agricultural products, etc.; risk of direct brand procurement falling short of expected risk; (3) SaaS business competition intensifies risk, risk of user turnover falling short of expectations, risk of user turnover falling short of expectations, risk of unanticipated future revenue and profit of the SaaS business; 4) Risk of the company's turnover being pressured, risk of insufficient financial cash flow, risk of declining net profit growth, and risk of revenue growth falling short of expectations.