Incident Overview

In 2023, the company achieved revenue of 2,044 billion yuan, a year-on-year increase of 6.51%; achieved net profit of 327 million yuan, an increase of 28.40% over the previous year; realized net profit without deduction of 301 million yuan, an increase of 30.89% over the previous year.

2024Q1 achieved revenue of 260 million yuan, up 15.73% year on year; net profit to mother - 56 million yuan, up 3.64% year on year; net profit after deducting non-return to mother - 61 million yuan, up 0.89% year on year; revenue structure optimization, gross margin increased significantly

1) In terms of revenue, the company achieved revenue of 2,044 billion yuan in 2023, an increase of 6.51% over the previous year. Looking at the revenue structure, sustainable revenue (SaaS revenue, operation and maintenance revenue) accounted for 45% of total revenue in 2023. Industry SaaS is currently being applied by tens of thousands of units in more than 50 industries in 24 provinces. Looking ahead, as scenario-based SaaS services and operation services continue to expand, the company's sustainable revenue is expected to further increase.

2) In terms of profit, the company achieved net profit of 327 million yuan in 2023, an increase of 28.40% over the previous year; 2024Q1 net profit to mother was -56 million yuan, an increase of 3.64% over the previous year.

3) In terms of gross margin, the company's gross margin in 2023 was 66.66%, up 5.03pct year on year; 2024Q1 company's gross margin was 61.49%, up 2.69pct year on year.

4) In terms of cost ratio, the company's sales expense ratio in 2023 was 15.92%, up 1.3 pct year on year; management expense ratio was 14.45%, up 1.2 pct year on year; financial expense ratio was -0.52%, down 0.37 pct year on year; R&D expense ratio was 18.06%, which is basically the same as in 2022.

5) In terms of cash flow, the net cash flow from the company's operating activities in 2023 was 329 million yuan, an increase of 6.5% over the previous year.

Deeply cultivate fiscal IT and accelerate the advancement of various businesses

1) Digital ticket field: The traditional industry continues to advance, and the company's financial electronic bill business has covered the Ministry of Finance and 31 provinces; in the medical electronic bill business, the company has promoted about 7,500 medical institutions at level 2 and above. Innovative business is developing rapidly. First, the company relies on the development opportunities of the Ministry of Finance's electronic accounting document accounting reform to promote integrated collaborative solutions and services such as digital certificate issuance, scenario distribution, receipt, use, audit, accounting, and filing on the unit side and enterprise side markets through its own product “Enjoy Collaboration Platform”. In 2023, the company launched in more than 20 regions, achieving operating revenue of more than 10 million; second, in terms of data elements, the company's commercial insurance services reached 27 provinces and realized business cooperation applications with more than 20 commercial insurance companies, with a business volume of tens of millions. Looking forward to the future, digital invoice, digital electronic vouchers, and cooperation with commercial insurance are expected to contribute new growth points. 2) Smart finance: In terms of integrated budget management, by the end of 2023, the company had deeply constructed the Ministry of Finance and 11 provincial and municipal integrated core business systems, and participated in the construction of 19 provincial integrated budget management related systems. Looking back, with the 2.0 construction and the development of big financial data, the integration of budget management is expected to continue to develop. 3) Digital procurement: By the end of 2023, the company's government procurement business had expanded to cover 18 provinces and 1 planned separate market; in terms of university procurement, the total number of university customers reached more than 280, covering 29 provinces and cities across the country, providing product technology services to more than 60% of universities directly under central ministries and departments; in terms of enterprise procurement, it had provided smart procurement platforms for 15 central enterprises.

Released the 2024 restricted stock incentive plan, highlighting the company's development confidence. On April 23, the company released the 2024 restricted stock incentive plan (draft), which aims to grant 16 million restricted shares to 120 people to the company's directors, senior management, and core technology (business) backbone. The performance evaluation target is based on the average net profit for 2021-2023 (net profit not attributable to mother, same below). The net profit growth rate for 2024/2025/2026 will not be less than 53.74%/92.18%/ 130.62%, calculated that the company's deducted non-net profit for 2024-2025 was not less than 3.81/4.76/571 billion yuan, respectively, with year-on-year growth rates of 26.5%/25%/20%, respectively. This equity incentive plan helps the company attract and retain outstanding talents, while demonstrating the company's confidence in future development.

Investment advice

We expect the company to achieve revenue of 24.05/29.01/36.35 billion in 2024-2026 (previous value of 32.6/42.9 billion in 2024/2025, respectively), up 18%/21%/25% year on year (31%/32% in previous value 2024/2025, respectively); achieve net profit of 4.17/5.56/7.43 (previous value 4.6/6.1 in 2024/2025, respectively) billion yuan, up 28%/33%/34% year on year (previous value 2024/2025, respectively) 33%/32% per year, respectively), maintaining a “buy” rating.

Risk warning

1) Policy support falls short of expectations; 2) Market competition increases risks; 3) Market expansion falls short of expectations.