Brief performance review
On April 11, 2024, the company released its 2023 annual report. The company achieved revenue of 6.50 billion yuan for the full year of 2023, a year-on-year decrease of 3.0%; net profit to mother was 650 million yuan, an increase of 2.6% over the previous year. The company achieved revenue of 2.58 billion yuan in Q4 in 2023, a year-on-year decrease of 8.2%; net profit to mother was 280 million yuan, a year-on-year decrease of 14.7%.
Management analysis
By business: 1) The company's software business revenue was 5.26 billion yuan, up 1.45% year on year; of these, insurance IT revenue was 3.6 billion yuan, down 1.3% year on year. In particular, revenue from traditional insurance customers fell 5.0% year on year. This is mainly due to delays in the year-end acceptance process for some insurance customers and short-term adjustments to IT budgets. However, the company seized the business opportunities brought by the IFRS17 insurance system construction, explored AIGC application scenarios in the insurance industry, and carried out the transformation of the insurance core business system to adapt to localization, laying the foundation for the future development of the insurance IT business. 2) Integrated business revenue was 1.23 billion yuan, down 18.4% year on year, mainly affected by the pace of customer acceptance. At present, the growth rate of new orders signed by the company's integrated business is still at a high level. The total amount of integrated project contracts that have not yet been executed is about 2.5 billion yuan, laying the foundation for a rebound in future revenue growth. Due to project receipts falling short of expectations at the end of the year, bad debt losses on accounts receivable increased, and the company's annual credit impairment losses reached -67 million yuan, which had an impact on overall net profit.
In the future, the company will continue to implement “Insurance+” and internationalization strategies. In 2023, the company's “Insurance+” related revenue was 130 million yuan, an increase of 55.7% year-on-year. The company continues to explore new business models and development directions, and continues to develop in the fields of health, transportation, consumption, safety, etc. In 2023, customers outside the mainland achieved revenue of 235 million yuan, an increase of 15.4% over the previous year. The company is already developing business in East Asia, Southeast Asia, South Asia, etc. The company is expected to launch more projects in 2024, and is also striving to expand solutions in banking IT, medical IT and other fields overseas.
Profit Forecasts, Valuations, and Ratings
Based on the company's 2023 annual report and expectations for steady growth in the industry, we expect the company's revenue from 2024 to 2026 to be 70.9/74.2/7.77 billion yuan, up 9.1%/4.6%/4.7% year on year; net profit to mother will be 6.9/7.8/860 million yuan, up 5.2%/13.7%/10.4% year on year, corresponding to 22.6/19.9/18.0 times PE, respectively, to maintain the “buy” rating.
Risk warning
Premium income and insurance IT investment fell short of expectations; “Insurance+” or overseas business development fell short of expectations; AIGC's enabling effects fell short of expectations; and executives and major shareholders risked reducing their holdings.