Recently, the company released its 2023 annual report, achieving full year operating income of 1,208 billion yuan (+32.3%), net profit to mother of 300 million yuan (+15.9% YoY), and net profit of 290 million yuan after deducting net income from mother (+19.5% year over year).
The basic market of the company's electronic payment business is stable, and the data elements have performed well. Maintain a buy rating.
Key points to support ratings
The basic market is stable, and the integrated budget management business has achieved rapid growth. In '23, the electronic payment of the company's core business achieved revenue of 650 million yuan (+5.0% year over year) and gross margin of 64.8% (+1.7 Pcts year over year), mainly due to the company's promotion of related business upgrades and declining market promotion. Revenue from the integrated budget management business increased by 84.2% over the same period last year, and gross margin reached 45.9% (year-on-year - 13.6 Pcts), mainly due to the company actively carrying out integrated benchmarking and upgrading work under the new construction cycle of integrated budget management.
The electronic multi-dimensional expansion of the industry, two-wheel drive for accounting data elements and health insurance data elements. The company's electronic products in the industry continued to expand into various areas such as medical insurance, electronic vouchers, digital yuan, etc., with revenue reaching 50 billion yuan (+ 126.2% year over year) and gross margin of 60.6% (+2.6 pcts year over year). The company took the data element business as its strategic direction and listed 11 data element products on the Guangzhou Digital Exchange. Among them, the “Qingyi Insurance (Health Insurance Claim)” data product obtained the “Guangdong Data Asset Registration Certificate” issued by the Guangdong Provincial Government Affairs Service and Data Administration, and the company enjoyed 50% data processing and use rights.
Budget unit cloud services are vigorously expanding customers. The company's budget unit, cloud services, achieved revenue of 50 billion yuan in 23 years (+183.8% year over year), and gross margin reached 54.6% (11.2 pcts year over year). Among them, the accounting cloud platform has expanded to 15 regions. By the end of '23, more than 170,000 budget units had been launched and all had successfully reported data. The integrated internal control cloud platform expanded finance, higher vocational colleges, transportation, public security and other units in many provinces and cities. By the end of '23, the company had served more than 500 enterprise customers.
valuations
The estimated net profit for 23-25 will be $3.8, 4.9 million, and 620 million yuan (considering the decline in gross profit from the company's integrated budget management, with a slight reduction of 3%-10% for 24 and 25), and EPS will be 1.96, 2.53, and 3.19 yuan, corresponding to PE of 29X, 22X, and 18X, respectively. The basic market of the company's electronic payment business is stable, the data elements are outstanding, and the purchase rating is maintained.
The main risks faced by ratings
Budget falls short of expectations; business development falls short of expectations; data element process falls short of expectations.