Incident: New Guodu released its 2023 annual report and 2024 quarterly report, 1) Achieved revenue of 3.801 billion yuan for the full year of 2023, a year-on-year decrease of 11.94%; realized net profit of 755 million yuan, an increase of 1558.44% over the previous year; realized net profit without deduction of 700 million yuan, an increase of 279.71% over the previous year. 2) In 2024Q1, we achieved revenue of 783 million yuan, a year-on-year decrease of 22.74%, and realized net profit attributable to mother/ deducted non-net profit of 221/212 million yuan, an increase of 66.40%/79.08% year-on-year.
Profitability continues to improve, and domestic business results are impressive. 1) At the operating level, revenue in 2023 was 3.801 billion yuan, down 11.94% year on year, and net operating cash flow was 1,133 billion yuan, up 347.56% year on year. Revenue fluctuated briefly due to factors such as license renewal and declining transaction flow. The increase in CFO was mainly due to strengthening cash flow management and payment recovery to improve operational efficiency. 2) At the profit level, gross margin reached 38.80% in 2023, up 13.53 pct year on year, net margin reached 19.84%, and increased 18.81 pct year on year, mainly due to significant increases in the gross margin of value-added receipt services and the overall domestic business.
The risk of license renewal has basically been eliminated, and the receipt business is about to rebound. Looking at the company's two major revenue sources, 1) Receipts and value-added services achieved revenue of 2,583 billion yuan, a year-on-year decrease of 15.55%, mainly affected by license renewal factors and strengthened risk control compliance. Jialian Pay's transaction volume in 2023 was 1.94 trillion yuan, down 24.81% over the same period. In July, Jialian Pay's “Payment Business License” was successfully renewed, and the risk of renewal was basically eliminated. In the fourth quarter, Jialian Pay's billing product line was shipped in large quantities, and transaction volume increased sequentially in December. It is expected that the revenue of the billing business will rebound in 2024. 2) Electronic payment products achieved revenue of 993 million yuan, an increase of 1.20% over the previous year. The overseas market for electronic payment devices achieved shipments of 4.463,900 units, an increase of 48.63% over the previous year. By the end of 2023, the initial construction of a payment service product system for cross-border and overseas markets had been completed, and the first overseas local transaction receipt was achieved.
Cross-border payment regions are expanding in an orderly manner, and AI is continuously being empowered. 1) In terms of AI products, the company and Shanghai Weisha Network Technology Co., Ltd. jointly funded the establishment of Shanghai Shiyi District Information Technology Co., Ltd. to set up an artificial intelligence research team to carry out research and development of General Purpose AI Agent (General Purpose AI Agent) technology, develop multi-modal AI products, and explore various solutions that enable AI technology to operate efficiently. Recently, the first AI “digital employee” product was released to seek new growth points. 2) In terms of overseas layout, Paykka, a newly launched cross-border payment product, already supports payment services in 10+ mainstream global currencies and 150+ global billing services. It also launched B2B receipt products and B2C billing products to expand high-end markets such as Europe, America, and Japan, expand localized operations, and cultivate new business growth points such as SofPOS and NEXGO Cloud.
Investment advice: The company's net profit for 24-26 is expected to be 908, 10.41, and 1,193 million yuan, respectively, with year-on-year growth rates of 20%/15%/15%, respectively. The current market value corresponding to the 24/25/26 PE is 13/12/10 times. Considering that the entire billing industry is expected to pick up significantly in 2024, the company's AI business continues to grow rapidly, and the overall national economy is recovering rapidly, and mobile payments in overseas markets are developing rapidly, the company is expected to fully benefit and maintain a “recommended” rating.
Risk warning: risk of changes in overseas demand; increased risk of market competition; channel promotion falls short of expectations