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致远互联(688369):降本增效开启 静待经营回暖

Zhiyuan Internet (688369): Start reducing costs and increasing efficiency and wait for business to pick up

國金證券 ·  Apr 26

Brief performance review

On April 25, 2024, the company released its 2023 Annual Report and 2024 Quarterly Report. The company achieved revenue of 1.04 billion yuan for the full year of 2023, an increase of 1.2% over the previous year; net profit after deduction was -58 billion yuan, turning a loss over the same period last year. Furthermore, since the equity incentive target was not achieved in 2023, 8.89 million shares were transferred back to pay fees. If this part of the impact is excluded, net profit not returned to the mother after deducting this part is approximately -67 million yuan.

On a quarterly basis, the company's revenue for the fourth quarter of 2023 and the first quarter of 2024 was 340 million yuan and 180 million yuan respectively, down 12.6% year on year and up 11.8%, respectively; net profit after deduction was -123 million yuan and -032 million yuan, respectively. Of these, the fourth quarter of 2023 changed losses compared to the same period last year, and the loss margin for the first quarter of 2024 decreased by 23.7%.

In addition, the company issued a restricted stock incentive plan to grant 4 million shares, accounting for 3.47% of the total share capital; the incentive target is 240 people, accounting for 8.67% of the total number of people. The initial award price was 17.15 yuan/share, a 10.0% discount from today's closing price. The attribution conditions are based on 2023 revenue, and the 2024-2026 revenue growth rate is no less than 6%/12.36%/19.10% to trigger the grant. The goal of the 100% grant is that the 2024-2026 revenue growth rate is 10%/21%/33.1%, respectively, compared to 2023.

Management analysis

In terms of revenue, acceptance of some of the company's projects was delayed at the end of 2023, which affected the company's operating performance in the fourth quarter of 2023. Direct sales revenue for the full year of 2023 was 920 million yuan, up 28.1% year on year, mainly due to a 49.7% increase in non-OA business revenue; however, distribution business revenue was 130 million yuan, down 59.7% year on year, which dragged down the company's overall operating performance.

In terms of expenses, due to the company's optimism about operations at the beginning of 2023, recruitment increased in the first half of the year, and the number of people in the middle of the year increased 9.3% compared to the beginning of the year; however, the company carried out comprehensive cost reduction and efficiency work in the second half of 2023, reducing redundant investment by optimizing the personnel structure and reducing expenses, etc., and the number of people at the end of 2023 fell 6.1% compared to the middle of the year, which also led to a year-on-year reduction in losses in the first quarter of 2024. In addition, due to payments from some customers falling short of expectations, the company accrued a credit impairment loss of $25 million in the fourth quarter of 2023, which had an impact on net profit for the fourth quarter of 2023 and the whole year of 2023.

Profit Forecasts, Valuations, and Ratings

Based on the company's 2023 annual report and expectations for the company's cost reduction and efficiency, we expect the company's revenue from 2024 to 2026 to be 11.3/12.2/1.32 billion yuan, up 8.0%/8.0% year on year; net profit to mother will be 0.3/0.7/130 million yuan, respectively, to reverse losses year on year, increase 163.6% year on year, increase 73.2% year on year, corresponding to 79.2/30.1/17.4 times PE, respectively, and maintain the “buy” rating.

Risk warning

Module expansion falls short of expectations; the macro environment affects customer demand and repayment progress; cost reduction and efficiency fall short of expectations; shareholders, directors and supervisors are at high risk of reducing holdings.

The translation is provided by third-party software.


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