Caixun's revenue grew steadily in 2023. The three major product lines fully embraced the generative AI industry trend. The implementation of related products such as AI email and 5G digital people continues to advance. It is expected that AIGC will open up new growth space for the company. Furthermore, the company proposed a three-year shareholder return plan, clarified the cash dividend ratio, etc., and shareholder returns are stable.
Incident: Caixun Co., Ltd. published its 2023 annual report. In 2023, the company achieved revenue of 1,496 billion yuan, 25.18% year on year; realized net profit of 325 million yuan, 44.31% year on year; net profit after deducting non-return to mother was 187 million yuan, 1.57% year on year. Q4 In a single quarter, the company achieved revenue of 403 million yuan, a year-on-year increase of 26.71%; net profit attributable to mother during the single quarter was 17.9.437 million yuan, a year-on-year decrease of 72.39%, and realized net profit deducted from non-return to mother of 3.5014 million yuan, a year-on-year decrease of 91.73%. The large year-on-year decline in net profit in a single quarter was mainly due to the company's impairment of goodwill of its subsidiary Xi'an Green Dot by 24.83 million, which had a significant impact on the profit for the quarter. The company's profit distribution plan for the reporting period is to distribute a cash dividend of 1.68 yuan (tax included) per share.
The three product lines are growing steadily. In 2023, the company's collaborative office/smart channel/cloud and big data product lines achieved revenue of 4.62/6.16/335 million yuan respectively, an increase of 30.48%/23.00%/53.23% over the same period last year. The state-owned cloud business is growing rapidly. According to the 2023 financial reports of the three major operators, the cloud business revenue of the three major operators totaled 231.5 billion yuan. Among them, Mobile Cloud's revenue in 2023 reached 83.3 billion yuan, a year-on-year growth rate of 65.6%. As the core provider of mobile cloud certification, the company's growth in mobile cloud revenue lays a solid foundation for the growth of the company's cloud and big data business. Furthermore, the company has accumulated project experience into reusable solutions to speed up project delivery and reduce investment costs. In '23, the company launched technical support projects for collaborative cloud business expansion in four cities in Guangdong Province, demonstrating the sustainability and replicability of cloud business in Guangdong, and is expected to be promoted and replicated in other provinces across the country. The collaborative office product line continues to promote the transformation of large-scale customer email messaging. The smart channel business continues to expand business scenarios while consolidating existing business, all of which have achieved steady revenue growth.
Fully embracing industry trends, generative AI has been integrated into multiple business lines such as email to open up new business space for the company. The office scenario is one of the best implementation scenarios for generative AI. In terms of multimedia enterprise email products, the company released the RichMail smart email demo in May 2023, connecting basic models such as Wenxin Yiyan, Baichuan Intelligence, Intelligent Spectrum ChatGLM, and Kimi. The core product develops three major capabilities — active service ability of secretaries, ability to integrate information processing based on large models, and ability to obtain and store cross-domain information. The ability to obtain and store information across domains. At the metaverse and digital human level, the company has accumulated core products such as 5G+AR/VR video platforms, digital human asset management platforms, and virtual space capability platforms. In 23 years, it has developed customized 5G video secretarial products for operator users, and has natural AI dialogue capabilities. In terms of the C-side state-owned cloud business, the company assists customers to develop intelligent cloud disk assistants to achieve intelligent functions such as Tusheng text, Wensheng maps, live photos, AI comics, intelligent cutout, and restoration of old photos, greatly increasing the activity of C-side users.
The company issued a three-year shareholder return plan and clarified shareholder return plans such as cash dividends. The company issued the “Shareholder Return Plan for the Company's Three-Year (2023-2025)”, which proposes that dividends will be distributed using cash, stocks, or a combination of cash and stocks, and that priority will be given to distributing dividends in the form of cash dividends.
If conditions are available, the company can distribute profits in the medium term. If the company satisfies the conditions for cash dividends, the dividend distributed in cash in a single year is not less than 15% of the distributable profit achieved in the current year, and the cumulative profit distributed by the company in cash in the last three years is not less than 30% of the average annual distributable profit achieved in the last three years, and the shareholder return is clear.
Maintain a “Highly Recommended” investment rating. The company's revenue is growing steadily, the three major business lines are fully embracing AI, and the implementation of related products continues to advance. It is expected that AIGC will open up new growth space for the company. We expect the company's net profit from 2024-2026 to be 333/434/564 million yuan, corresponding to PE22/17/13 times 2024-2026. Maintain a “Highly Recommended” investment rating.
Risk warning: industry competition intensifies, expansion of new fields falls short of expectations, development of new technologies and products falls short of expectations, policy implementation falls short of expectations.