Core views:
The performance was in line with expectations, and the quality of operations continued to improve. In 2023, the company achieved revenue of 5.20 billion yuan, yoy +21.5%; net profit to mother of 330 million yuan, yoy +28.8%; deducted non-net profit of 320 million yuan, yoy +29.3%. Benefiting from the rapid growth of the Xinchuang business (up 77.47% year over year to $1,720 billion), the company achieved steady growth in both revenue and net profit. At the same time, the quality of the company's operations continues to improve.
Financial Xinchuang's data business highlights stand out. During the reporting period, the company added multiple heavyweight customers and successfully opened up important markets where multiple business lines were empty in the past. Of the new orders added to the data business line, more than half were businesses related to Xinchuang, and the cooperation in the Xinchuang ecosystem is gradually improving.
The innovative business is progressing steadily, and overseas business can be expected in 2024. The company's innovative operation business has now formed an ecological platform to enable and joint operation to enable two-wheel drive. The company's overseas business progressed steadily in 2023. With the gradual recovery of the macroeconomy, full development of overseas business, and the advancement of new strategic directions such as cooperation with Xiamen Asset Management Company, the company's innovative business is expected to resume positive growth.
The banking industry is accelerating digital transformation, and AI will continue to help companies reduce costs and increase efficiency. (1) The company actively grasped the new needs and opportunities brought by generative AI, and launched the first batch of large-scale model application products and solutions for the financial industry (including 4 application-level products and 1 development platform) and the Yushin all-in-one computer through independent research and development. (2) The maturity of generative AI technology and its gradual implementation on the application side are expected to continue to help the company achieve cost reduction and efficiency.
Profit forecasting and investment advice. We expect the company's net profit to be 369/472/584 million yuan in 2024-2026, an increase of 13.1%/28.1%/23.8% year-on-year. Considering that the company is a leading bank IT vendor, referring to the company's historical valuation and comparable company valuation, we gave the company 35 times PE in 2024, corresponding to the latest number of shares, with a reasonable value of 18.32 yuan/share per share, maintaining a “buy” rating.
Risk warning. Customer demand fixes fall short of anticipated risk. New product development progress falls short of anticipated risk. Competition in the industry increases risk.