Incident: The company released its annual report for 20223 and the quarterly report for 2024. The company achieved operating income of 2,044 billion yuan in 2023, an increase of 6.51% over the previous year; net profit to mother was 327 million yuan, an increase of 28.40% over the previous year.
Non-net profit after deduction was $301 million, an increase of 30.89% over the previous year. In 2024Q1, the company achieved operating income of 260 million yuan, an increase of 15.73% year on year; net profit loss was about 56.2894 million yuan, a year-on-year decrease.
Comment:
The gross margin continues to rise, and the optimization of the share of SaaS and sustainable revenue supports the company's long-term growth.
The company's gross margins for 2023 and 2024Q1 were 66.66% and 61.49%, respectively, with year-on-year increases of 5 pct and 2.69 pct, respectively. The main reason for the increase in gross margin is that the company increases its share of sustainable revenue by providing scenario-based SaaS services and operation services; the company's SaaS services are used in electronic voucher business collaboration services, budget unit financial management services, etc., and will expand SaaS business scenarios such as digital and electronic vouchers integrated ticketing collaborative services in the future. The company's gross profit is expected to continue to increase in the future.
The cornerstone business remained ahead, and the innovative business welcomed the smooth progress of Dongfeng's policy to prepare for future explosions. In terms of electronic certificates, since 2023, the Ministry of Finance and other ministries and commissions have successively issued various documents such as the “Notice of the General Office of the Ministry of Finance on Continuing Pilot Work to Deepen Electronic Certificate Accounting Data Standards” to help innovate digital finance and electronic unit reimbursement, accounting and filing scenarios; the company promotes integrated collaborative comprehensive solutions and services in unit side and enterprise side markets through its own product “Enjoy Collaboration Platform”. The company has launched more than 10 million service units, with more than 100 million registered users. The number of transactions exceeded 10 billion. In terms of data elements, the company's commercial insurance services have reached 27 provinces, and business cooperation applications have been realized with more than 20 commercial insurance companies. The business volume is tens of millions, and future space can be expected.
On the AI side, the company promotes the application of AI in the fields of electronic vouchers, big financial data, procurement, etc., to enable the construction of digital governments.
The company released a draft restricted stock incentive plan for 2024. Since 2017, the company has issued 6 equity incentives, demonstrating the company's shared philosophy and long-term development confidence. The company's past equity incentive performance assessment goals were well achieved. The 2024-2026 annual performance assessment targets for the current incentive plan were to deduct non-net profit of 3.8, 4.8, and 570 million yuan, respectively. Considering that the company's incentive plan costs have maintained a high level in recent years, this performance assessment target fully demonstrates the company's confidence in net operating profit and the company's long-term development.
Profit forecast and investment advice: From 2024 to 2026, the company is expected to achieve revenue of 24.75/31.74/4.177 billion yuan, up 21.1%/28.2%/31.6% year on year; net profit to mother of 4.21/5.73/779 billion yuan, up 29.0%/36.1%/35.9% year on year, corresponding PE is 23.9/17.5/12.9X, maintaining a “buy” rating.
Risk warning: The e-voucher policy fell short of expectations, and profit forecasts fell short of expectations.