Incidents:
The company released the “2023 Annual Report” and “2024 First Quarter Report” after closing on April 12, 2024.
Comment:
Revenue achieved steady growth in 2023. Revenue increased by 43.10% in the first quarter of 2024. In 2023, the company achieved operating income of 749 million yuan, up 7.80% year on year; realized net profit of 62 million yuan, down 59.93% year on year; gross margin was 38.43%, down 9.23 pct year on year. By industry, revenue from the petroleum and petrochemical industry was 385 million yuan, down 10.80% year on year; revenue from the construction real estate industry was 128 million yuan, down 5.25% year on year; revenue from the financial industry was 81 million yuan, up 31.44% year on year; and revenue from the coal power industry was 69 million yuan, up 159.23% year on year. The industry distribution of the company's revenue has been further diversified, but due to the decline in revenue in the two major dominant industries of petroleum and petrochemicals and construction real estate, the company's revenue growth rate has slowed down. In the first quarter of 2024, the company achieved revenue of 77.5227 million yuan, an increase of 43.10% over the previous year, mainly due to a combination of factors such as the company's new customers, business expansion in new fields, and the gradual increase in the subsequent operation and maintenance business of completed projects; it achieved a net profit of 3.2708 million yuan.
The treasury business is progressing smoothly, and the Xinchuang pilot is progressing steadily
2023 is a critical year for the construction of a central enterprise treasury system. The company's treasury management client projects have all been delivered and approved, and the second phase of the project was launched on the basis of early construction. The treasury data center promoted and applied to customers such as GM Group, Sinopharm Group, China Nuclear Power Group, and Air China Group, successively won bids for global treasury projects for customers from China Sinochem and Shandong Energy; overseas treasury centers and direct connections between global banks and enterprises. In terms of Xinchuang's business, we focus on the energy industry and financial insurance industry, actively promote pilot application projects for Xinchuang EAM, EPM, and ERP for large group companies, and lay a good product foundation for the next comprehensive market development.
Continue to increase investment in R&D and fully support the Xinchuang product system
In 2022, the company launched the implementation and construction of the “Domestic ERP Group Financial Core Product R&D Project” and the “Technology Platform Enhancement R&D Project”. In 2023, we achieved many breakthroughs in key performance indicators and innovative applications of functions. In terms of adapting the Xinchuang environment, we completed multiple models/domestic chip, operating system, middleware, and database adaptations to fully support the Xinchuang product system; in terms of Shinchuang software replacement, we launched many software products or technology platforms such as Xinchuang ERP, EAM, and the next-generation R&D technology platform-Yunhu Platform.
Profit forecasting and investment advice
The company has always focused on the development and service of enterprise management software for large groups, and has accumulated rich information solutions centered on group management and high-quality customer resources, mainly from central state-owned enterprise groups, and has broad room for continuous growth in the future. The company's revenue for 2024-2026 is estimated to be 9.19, 11.00, and 1,280 million yuan, net profit to mother of 1.42, 1.80 million yuan, 224 million yuan, EPS 0.70, 0.89, and 1.11 yuan/share, corresponding PE of 20.32, 16.07, and 12.89 times. Maintaining a “buy” rating considering the industry's room for growth and the continued growth of the company's business.
Risk warning
The risk of a high concentration of the company's customers; the risk of seasonal fluctuations in the company's performance; the risk of market competition; the risk of technological innovation; and the risk of loss of core technical personnel and leakage of core technology.