The company discloses its 2023 annual report. Revenue for 2013 was 1,829 billion yuan, +7.7% year over year; profit attributable to mother was 83.39 million yuan, -42% year over year; profit after deducting non-return to mother was 60.58 million yuan, -40% year over year.
B-side operating data is impressive, and financial reporting data such as contract liabilities and cash flow performed excellently. 1. The B-side achieved revenue of 1,085 billion yuan in 23 years, +14% year over year, and net profit of 245 million yuan, +37% year over year.
Net margin was 22.62%, up 3.87 pct year over year. 2. The number of paying users and user renewal rates in the SME customer base remained stable, while ARPU was +11.66% year over year. The growth rate increased over the previous 2 years, and the number of high-value users increased 79% year over year. In our recent in-depth company report, we believe that the promotion of high-value services has achieved significant results, which will drive ARPU growth. Looking at it so far, the trend is good. 3. The fiscal and tax agent customer base also showed outstanding performance. Although ARPU decreased by about 8%, the number of active users was +20.3%, the number of paid users was +34.2% year over year, and current subscription revenue increased 23.8% year over year to 520 million yuan. The data shows that the company achieved an increase in market share in the accounting market by comprehensively meeting the digital needs of accounting agencies, which is in line with the predictions of our previous in-depth report. 4. The outstanding performance of the B-side business led to a 17.8% increase in contract debt compared to the beginning of the year, and the growth rate increased significantly compared to the previous two years. Net operating cash flow in '23 was $244 million, which was significantly higher than net profit.
The G side experienced a large loss in '23, maintaining the expectation of a significant loss reduction in 24. It is estimated that the company lost about 163 million yuan on the G-side in '23. On the one hand, this is affected by the tightening of user budgets. On the other hand, the fourth phase of 23 annuity tax is still being developed and piloted in the early stages, and has not entered the full promotion stage. Therefore, we believe that if the fourth phase of the 24 annuity tax is fully promoted, the company can expect to significantly reduce losses. The core logic is to take into account that all R&D under the fourth phase of the gold tax has come to an end in 23 years, and most of the corresponding R&D costs have already been settled, while the 24-year promotion phase only needs to bear relatively less promotion costs.
Profit forecasting and investment advice. It is estimated that in 24-26, the company's net profit to mother will be 275 million yuan, 362 million yuan, and 486 million yuan respectively. We maintain the company's judgment of a reasonable value of about 38.21 yuan per share. Corresponding to EPS in '24, its PE was 56X, maintaining a “buy” rating.
Risk warning. Macroeconomic fluctuations; increased industry competition; and uncertainty about the contribution of AI applications to performance.