Incident: On the evening of April 22, Xindalu released its 2023 annual report. The company achieved revenue of 8.250 billion yuan for the full year of 2023, an increase of 12% over the previous year; realized net profit of 1,004 billion yuan, compared with -382 million yuan in the same period last year; deducted non-net profit of 1,084 billion yuan, an increase of 137% over the previous year.
Revenue growth in 23Q4 was impressive. Looking at Q4 of 2023, the company achieved revenue of 2,366 billion yuan in a single quarter, an increase of 28% over the previous year; realized net profit of 185 million yuan, compared to -754 million yuan in the same period last year; and realized deducted non-net profit of 194 million yuan, compared to -16 million yuan for the same period last year. The company got rid of the overall policy influence of the payment industry in 2022 and achieved a strong rebound in revenue and profit.
The payment business ushered in a double click of “turnover plus rate” increase. In 2023, Xindalu's merchant operations and value-added business achieved revenue of 3.882 billion yuan, an increase of 33.57% over the previous year. At the same time, the gross margin of the merchant business reached 41.19%, an increase of 13.99 pcts over the previous year. Regarding the payment business, it can be viewed from the perspective of turnover plus rate. In terms of turnover, the total volume of payment service business transactions in the New Mainland exceeded 2.5 trillion dollars throughout 2023, an increase of about 8% over the same period last year, while gross margin increased significantly year-on-year, confirming the trend of higher rates in the payment industry.
Step up efforts to lay out overseas business and find new volume. Xindalu has a significant scale advantage in the field of smart terminal manufacturing. According to the latest Global Nielsen Report, Xindalu Payments ranked first in the world in global shipments. In 2023, the company's electronic payment products achieved revenue of 3.199 billion yuan, a year-on-year decrease of 4.07%, and gross margin reached 37.68%, an increase of 4.41 pct compared with 2022. In 2023, the company achieved total sales of products such as smart and pan-intelligent POS, smart cash registers, standard POS, code scanning POS, and pan-smart terminals, etc., with overseas sales exceeding 3.5 million units, and the company's overseas revenue in '23 was 2,253 billion yuan, an increase of 8.69% over the previous year. The company laid out all aspects of overseas business, and accelerated the expansion of local markets in Asia Pacific, Latin America, the Middle East, Europe and other regions.
Cash flow reached a record high, and a strong dividend plan was announced. In 2023, the company's sales revenue reached 8.020 billion yuan, up 10% year on year, and net operating cash flow reached 2,227 billion yuan, up 113% year on year. The company's overall cash flow performance was impressive. At the same time, the company announced the 2023 dividend plan. It plans to pay 5 yuan (tax included) for every 10 shares, and the overall cash dividend amount will reach 507 million yuan. The impressive cash flow performance and favorable dividend plan highlight the company's high-quality operation while focusing on shareholder returns.
Investment advice: The company's net profit for 24-26 is estimated to be RMB 12.4, 15.0, and 1.66 billion yuan, respectively, with year-on-year growth rates of 24%, 21%, and 11%, respectively. The current market value corresponding to the 24/25/26 PE is 14/12/11 times. Considering the continuous improvement in the supply pattern of the payment industry and the further expansion of the overseas payment market, the company's main business is expected to fully benefit and maintain the “recommended” rating.
Risk warning: increased market competition; regulatory risks; inability to continue enjoying tax benefits; technical risks.