Brief performance review
Revenue & profit side - In line with expectations in '23, Q1 revenue was slightly pressured by factors such as base and no price increases, but profits remained high due to scale effects.
On April 26, 2024, the company released its 23 annual report and 24 quarterly report. 1) Revenue side: 23FY achieved revenue of 1,481 billion yuan, yoy +25.49%; 23Q4 achieved 385 million yuan, yoy +12.73%. 24Q1 achieved 358 million yuan, yoy +0.90%. 2) Profit side: 23FY achieved net profit of 86 million yuan, yoy +113.20%; 23Q4 achieved 121 million yuan, yoy +25.24%. 24Q1 achieved 226 million yuan, yoy +22.99%. Profit margin: 23FY comprehensive gross margin of 94.77%, yoy-0.74pct, net profit margin of 5.82%, yoy+2.39pcts.
24Q1 comprehensive gross margin was 94.50%, yoy-1.21pcts, net profit margin 7.17%, yoy+1.29pcts.
Structural side - In 23 years, AI enabled rapid growth in creative products for video, documents, and graphics, and overseas regions contributed the largest share of revenue. By product: The video creative category achieved revenue of 961 million yuan, accounting for 64.87%; the gross profit margin was 94.64%, and the subscription renewal rate increased by 5 pcts. The document creative category achieved revenue of 130 million yuan, accounting for 8.79%, and a gross profit margin of 93.82%. Wanxing PDF/PDF Element paid users were +20% year-on-year.
The creative drawing category achieved revenue of 129 million yuan, accounting for 8.71%, gross profit margin of 94.31%, and monthly activity +30% year-on-year. The utility tool category achieved revenue of 256 million yuan, accounting for 17.28%, and a gross profit margin of 96.33%. By region: Overseas revenue of 1,350 billion yuan, accounting for 91.19%, gross profit margin 94.88%. The domestic market (including Hong Kong, Macao and Taiwan regions) achieved revenue of 130 million yuan, accounting for 8.81%, and a gross profit margin of 93.60%.
The fee-side - sales rate is declining year by year. It is expected to be related to the increase in the share of subscriptions and the continuous increase in the renewal rate of core products. 23FY R&D expenses rate 27.18%, yoy-2.29pcts; sales expenses rate 48.81% (49.15% in 22 years), yoy-0.34pct; management expenses rate 11.16%, yoy-0.63pct. The share of the company's 23 semi-annual report subscription revenue increased to 72%, and the 23 semi-annual report subscription renewal rate increased to 65%.
Let's adjust the company's revenue for 2024-2026 to
Of RMB 1,786/21.60/2.658 billion, net profit to mother was RMB 1.07/1.51/227 billion, and EPS was RMB 0.78/1.09/1.65, respectively. The current price of the company's stock corresponds to a PE valuation of 99.5/70.5/46.8 times, maintaining a “buy” rating.
The pace of customer base expansion falls short of expectations; industry competition intensifies; and the risk of exchange rate fluctuations.