Shanghai Steel Union released its 2023 annual report. The company's industrial data service revenue grew rapidly, and the restoration of offline services laid the foundation for further growth in data subscriptions. The scale of steel and silver e-commerce transactions continues to grow, controlling business risks and improving the quality of operations. The company actively embraces industry trends, and data elements and AI bring new impetus to business expansion.
Event: Shanghai Steel Union released its 2023 annual report. In '23, the company achieved revenue of 86.314 billion yuan, an increase of 12.73% over the previous year. Achieved net profit attributable to shareholders of the parent company of 240 million yuan, an increase of 18.32% over the previous year. Net profit after deduction was $191 million, up 12.57% year over year. Among them, the company achieved revenue of 19.767 billion yuan in a single quarter, up 12.61% year on year; realized net profit of 73.449 million yuan, up 12.52% year on year; realized deducted non-net profit of 72.44 million yuan, an increase of 31.01% year on year.
Revenue from industrial data services grew rapidly in '23, and the restoration of offline services laid the foundation for further growth in data subscriptions. The company's industrial data service sector achieved revenue of 802 million yuan, a year-on-year increase of 15.99%; among them, offline business recovered rapidly, and business promotion/conference training/research and consulting services achieved year-on-year growth rates of 21.20%/90.09%/24.73% respectively, which was the main driving force for the growth of industrial data services in '23. The offline business is an important source of traffic for the company's data subscription services. It is expected that the high increase in offline business in '23 will save strength for the subsequent growth of the data subscription business. In '23, the company achieved data subscription revenue of 439 million yuan, a year-on-year increase of 4.79%, and a three-year compound growth rate of 17.72%. The Steel Union database has built 22 major industry databases, with more than 150 segmented application databases, involving more than 8,000 commodity varieties; Longzhong Information, an important subsidiary, achieved revenue of 156 million yuan and net profit of 10.24 million yuan; continuous category expansion drives the development of the data subscription business.
The scale of steel and silver e-commerce transactions continues to grow, controlling business risks and improving the quality of operations. The settlement volume of the steel and silver platform in '23 was 63.6407 million tons, an increase of 20.14% over the previous year. Steel and silver e-commerce achieved operating income of 85.508 billion yuan, an increase of 12.70% over the previous year; net profit to mother was 320 million yuan, an increase of 17.28% over the previous year. Among them, the company's supply chain services achieved revenue of 83.164 billion yuan, an increase of 16.64% over the previous year; the consignment transaction service achieved revenue of 2,268 billion yuan, a year-on-year decrease of 49.62%. The decline in revenue from the consignment transaction business is mainly due to the company's drastic reduction in prepaid consignment business, and the reduction in prepaid business helps the company control operating risks. The company's net operating cash flow in 2023 was 112 million yuan, a year-on-year decrease of 90.3%, mainly due to subsidiaries increasing capital investment in the supply chain business.
Data elements and AI are new drivers for the company's business. In terms of data element business, on the one hand, the company benefits from data asset registration, and also participates in customer data asset management preparation and database construction.
In terms of AI applications, the company has provided customers with AI price prediction modules, and the “Xiaogang” digital intelligent assistant is also being tested and iterated. Furthermore, in the field of AI investment and research, the company is arranging independent R&D and overseas cooperative dual-line development. The company actively embraces industry trends, and it is expected that data elements and AI will be new growth drivers for the company's business.
Maintain a “Highly Recommended” investment rating. The company's industrial data services continue to grow rapidly, and the steel trading business is growing steadily. Data elements and AI may be new drivers for the company's business. The company's net profit for 24-26 is estimated at 2.89/355/ 433 million yuan, corresponding to 23/19/16 times PE in 24-26. Maintain a “Highly Recommended” investment rating.
Risk warning: the expansion of new categories falls short of expectations; raw material prices are declining; industry competition is intensifying; the speed of implementation of policies falls short of expectations; the implementation of new products and technologies falls short of expectations.