The company released its 2023 annual report and 2024 quarterly report on April 24, 2024. The company's 2023 revenue was 2.254 billion yuan (YoY -0.75%), net profit of 254 million yuan (YoY +1.98%), 23Q4 single-quarter revenue of 572 million (YoY -5.54%), and net profit of 126 million yuan (YoY +30.11%). The performance was lower than the lower limit of the previous performance forecast. 24Q1 revenue of $540 million (YoY +4.51%), net profit attributable to mother of $20 million (reversal of losses). The results were in line with expectations.

Market demand is gradually improving, and performance is expected to gradually recover. The reason for the slowdown in the company's performance growth is mainly due to factors such as continued contraction in manufacturing market demand, intensification of trade conflicts, and a complex international environment. The pace of recovery in the manufacturing industry is slow and total profits have declined, leading to a slowdown in digital investment by individual major customers and a slowdown in the pace of acceptance confirmation of some projects. What can be seen, however, is that from the third quarter of 2023 to the first quarter of 2024, the company's performance gradually recovered, and the deducted non-net profit for the first quarter increased by nearly 200% year-on-year. We believe that as the company's market environment improves in 2024 and the company continues to implement open source savings, quality and efficiency strategies within the company, the overall performance of the company is expected to be better than in 2023.

Adhering to the product service transformation strategy, we have achieved remarkable results in customer development. In 2023, the company continued to increase its efforts to develop the incremental market for large and medium-sized enterprises, while increasing commercialization investment in intelligent manufacturing and new enterprise applications, and achieved remarkable results in customer development. The licensing revenue for self-developed products exceeds 130 million, and the share of the company's revenue is increasing year by year, and self-developed products are gradually being recognized. In the field of pan-ERP, financial integration and comprehensive budget management products have successively gained leading customers in industries such as new energy, electric personal mobility, and FMCG; integrated supply chain products have been signed and launched with customers in the communications electronics and consumer electronics industries. The AIGC platform, a major manufacturing service model, was released, and became one of the first partners of Huawei's “Pangu Big Model”.

Actively develop overseas markets and follow China's intelligent manufacturing to the world. Judging from the layout trend, the overseas business of Chinese companies is gradually spreading from traditional mature regions such as Europe, America, and Southeast Asia to emerging regions such as the Middle East and Africa. Going overseas has become an inevitable trend in the development of the times. For overseas enterprises, the differences between the needs and challenges of digitalization are quite obvious. Since the adjustment of an enterprise's operating model will involve the restructuring of people, goods, business objects, business attributes, business logic and rules, compared to the domestic market, the transformation of its digital business system is more profound. This will bring more digital service opportunities and orders to the company as Chinese enterprises go overseas. It is recommended to continue to focus on the company's overseas business to bring new performance growth space.

Profit forecast: The company's revenue for 2024-2026 is estimated to be 26.11, 30.79, and 3.642 billion yuan, respectively, and net profit attributable to mother is 2.82, 3.54, and 428 million yuan, respectively, maintaining a “buy” rating.

Risk warning: downstream economic recovery falls short of expectations, market competition intensifies, performance forecasts fall short of expectations