Investment event: On April 13, the company released its 2023 annual report. In 2023, the company achieved operating income of 4.242 billion yuan, an increase of 15.48% year on year; realized net profit of 348 million yuan, up 25.44% year on year; realized net profit after deducting non-recurring profit and loss of 329 million yuan, an increase of 30.42% year on year; net profit attributable to listed companies after deducting non-recurring profit and loss and excluding share payment expenses was 334 million yuan, an increase of 32.68% year on year.
The business structure continues to improve, and core customer resources are high quality. In 2023, the company achieved revenue of 4.242 billion yuan, an increase of 15.48% over the previous year. The company's information technology service business achieved revenue of 2,790 billion yuan, an increase of 20.19% over the previous year, accounting for 65.77% of the company's total revenue. Among them, the software product and solution product line achieved revenue of 935 million yuan, an increase of 24.48% over the previous year. The growth rate was ahead of the company's other product lines and promoted the continuous improvement of the company's business structure. The six major banks and joint stock banks are the main investors in bank IT. The company deeply explores customer value. Revenue from the six major banks and joint stock banks reached 3.270 billion yuan, an increase of 15.49% over the previous year, accounting for 77.10% of the company's total revenue. At the same time, the company's penetration among small and medium-sized banks, non-bank financial institutions, and non-financial institution customers (focusing on central state-owned enterprises) accelerated. In 2023, the revenue growth rate of small and medium-sized banks and non-bank financial institutions was significantly faster than the company's overall growth rate.
Increased gross margins go hand in hand with cost optimization. In 2023, the company's gross margin was 23.32%. Thanks to the company's active use of cutting-edge technology such as AI to improve basic development efficiency and rely on self-developed enterprise digital management platforms to strengthen the intelligent management of customers and projects, the gross margin of the information technology sector increased by 0.72% year-on-year, and the share of high-margin business continued to increase the superposition sector's own gross margin repair, and jointly promoted a 0.82% increase in overall gross margin. In terms of expenses, the company's sales/management/R&D expenses rates in 2023 were 1.76%/3.33%/9.29%, respectively. Compared with the same period last year, they decreased by 0.11%/0.12%/0.14%, respectively, and the overall cost ratio was well controlled.
Financial Xinchuang has entered the deep-water zone, and the company has sufficient reserves of Xinchuang technology. In 2023, financial credit innovation will enter a comprehensive promotion stage. Along with the promotion of top-level national policies and the improvement of domestic credit innovation capabilities, financial credit creation is expected to accelerate further in the future. By the end of 2023, the company has completed 11 national Xinchuang certifications. The company is expected to actively seize the digital transformation of the banking industry and the development opportunities of financial credit innovation to achieve steady growth in performance.
Investment advice: According to the company's 2023 annual report, and the growth rate of fintech investment is slowing down, we have adjusted 2024 and 2025 to add profit forecasts for 2026. It is predicted that the company's revenue for 2024-2026 will be 47.71/54.17/6.202 billion yuan (2024-2025 will be 5.44/6.537 billion yuan, respectively), and net profit to mother will be 4.11/4.90/590 million yuan (2024-2025, respectively), corresponding PE will be 17/15/12 times, respectively, maintaining the “buy” rating.
Risk warning events: business development falls short of expectations, slow policy progress, untimely data updates, etc.