Incident: The company released its 2023 annual report, achieving operating income of 271 million yuan, -21.92% year-on-year, and net profit of 9.6639 million yuan, +111.6% year-on-year, turning a loss into a profit. The first quarter of 2024 achieved operating income of 50,1381 million yuan, +3.68% year over year, and realized net profit to mother of 9.1983 million yuan, +14.95% year over year, reducing losses.
Business transformation has entered a payback period, and full-year results have reversed losses. 1) The macroeconomy is in the recovery stage, and the company's traditional enterprise acceleration services are still being restored. Revenue in 2023 increased 11.89% year-on-year; urban development services were affected by slow G-side repayment progress, which calculated asset impairment and credit impairment losses of 13.4 million yuan. 2) The company's strategic transformation has begun to bear fruit, and the enterprise service business revenue share has surpassed that of traditional main business enterprises to accelerate service. Among them, intellectual property services increased 23.86% year on year in 2023, SaaS model services increased 49.17% year on year in 2023, and finance and tax services for low gross profit businesses were completely reduced and optimized. The company's overall gross margin in 2023 was 55.11, an increase of 26.76 percentage points over the previous year, and profitability increased dramatically.
The gradual implementation of new artificial intelligence businesses is expected to open up new growth space. The company's new AI business layout has begun to be implemented. In 2023, the company increased AI business revenue by 1.649,800 yuan. 1) AI training: The company and its subsidiaries cooperate with technology companies and education companies such as Alibaba DAMO Academy, Huawei Cloud Computing Technology Co., Ltd., Unicom (Shanxi) Industrial Internet Co., Ltd., Donghua Software, China Public Education, etc., to develop various products such as AI awareness training for founders, qualification training for AI technicians, and AI vocational education training for college students. 2) AI enterprise service aspect: Based on the company layout model, computing power, and service, the AI service ecosystem provides a full chain of one-stop services for small and medium-sized enterprises and grass-roots government application models. The commercialization process of the company's new AI business is expected to accelerate significantly in 2024, bringing new room for growth.
Maintain a “buy” rating. The company's corporate services are developing rapidly, and the new business AI training and services have great potential for growth. Since the traditional main business is still recovering, we have adjusted the company's profit forecast. We expect 2024-2026 revenue of 3.94 to 4.81/556 billion yuan and net profit of 0.52/0.99/131 million yuan to maintain the “buy” rating.
Risk warning: Emerging AI businesses fall short of expectations, macroeconomic risks, and increased industry competition risks.