Insurance IT leader maintains “buy” rating
The company's revenue declined slightly in 2023, and profits showed resilience. Considering the impact of the pace of acceptance by downstream customers, we lowered the 2024-2025 and added 2026 profit forecasts. We expect net profit to be 7.89, 9.51, 1,148 billion yuan (originally 10.00 and 1,250 billion yuan), EPS is 1.33, 1.60, 1.93 yuan (originally 1.68 and 2.11 yuan), and the current stock price corresponding PE is 20.2, 16.8, and 13.9 times. The company's integrated business orders are sufficient, and is expected to be driven by insurance+, internationalization, and flywheel strategies Grow and maintain a “buy” rating.
Revenue declined slightly, and profits showed resilience
The company released its 2023 annual report. In 2023, it achieved revenue of 6.503 billion yuan, a year-on-year decrease of 3.01%, and realized net profit to mother of 655 million yuan, an increase of 2.59% over the previous year, and net profit after deducting non-recurring profit and loss of 645 million yuan, an increase of 4.80% over the previous year. The decline in revenue was mainly due to the impact of downstream customer acceptance progress. The gross margin was 31.56%, an increase of 2.27 percentage points over the previous year, mainly due to the company taking into account factors such as customer repayment ability, credit level, and project execution risk to actively reduce high-risk projects and improve project quality. Despite declining revenue, net profit continued to grow, showing a certain degree of resilience.
Integrated business orders are sufficient, and insurance+, internationalization, and Flywheel strategies drive growth (1) System integration business revenue in 2023 was 1,229 billion yuan, a year-on-year decrease of 18.42%, mainly due to the decline due to the pace of customer acceptance. The growth rate of new orders for the company's system integration business is still at a high level. By the end of December 2023, the total contract amount for the company's unexecuted system integration project was about 2.5 billion yuan, laying the foundation for a rebound in future system integration business revenue growth.
(2) The software business revenue in 2023 was 5.260 billion yuan, up 1.45% year on year, maintaining positive growth. Insurance IT business revenue declined 1.29% year over year due to delays in project acceptance progress for some customers and short-term adjustments to IT budgets for individual customers. Benefiting from the rapid growth in software products, “Insurance +” and business revenue outside the mainland, the gross margin of the insurance IT business increased by 1.96 percentage points to 35.69%.
(3) The company continues to advance the “Insurance+” strategy, internationalization strategy and “flywheel” strategy. Direct business revenue from the “Insurance+” strategy in 2023 was 130 million yuan, an increase of 55.66% year on year. Customers outside the mainland achieved revenue of 235 million yuan, an increase of 15.41% year on year. At the same time, the company is actively exploring the “Flywheel” business development model, which is expected to inject new vitality into the company's revenue growth.
Risk warning: Insurance IT investment falls short of expectations; market competition intensifies; strategy progress falls short of expectations.