Key points of investment
The company released its 2023 annual report and 2024 quarterly report. The full year of 2023 achieved revenue of 1,045 billion yuan, an increase of 1.18% over the previous year, and net profit to mother of -50 billion yuan. In Q1 2024, we achieved revenue of 183 million yuan, an increase of 11.78% year on year, and net profit to mother was -31 million yuan, a decrease in losses compared to last year.
2024Q1 performance picked up, and a new round of stock incentive plans was released to achieve revenue growth in 2023. Annual R&D expenditure was 237 million yuan, up 15.51% year on year. R&D investment accounted for 22.67% of revenue, an increase of 2.82 pcts over the previous year. Sales investment on the COP-V8 platform increased during the new product promotion period. The sales cost rate in 2023 was 42.98%, an increase of 3.83 pcts over the previous year. Increased investment in R&D and sales has put pressure on performance in the short term. Judging from the quarterly data, the net profit from 2024Q1 has been reduced, and operations have begun to pick up.
In addition, the company announced a new round of stock incentive plans to grant 40 million restricted shares to 240 incentive recipients. The assessment target is: 2024-2026 revenue growth is 10.00%, 21.00%, and 33.10%, respectively, based on 2023.
Continuing to refine the benchmark case. COP-V8 has built a second growth curve to expand customized applications based on the different characteristics of the industry and field. The company continued to polish products, and accumulated the following benchmark cases in 2023: China National Petroleum Pipeline Network Group's intelligent collaborative office platform, China Pharmaceutical Group's distributed intelligent operation platform, and China First Group's “Digital One” project.
The COP-V8 platform focuses on digital business construction for very large customers, creating the company's second growth curve. Since the commercial operation, the contract amount has exceeded 90 million yuan, and large customers including Changjiang Electric Power, BAIC Group, and the Shenzhen Stock Exchange have been signed.
Actively lay out applications in the AIGC field and create new scenarios for AI+ intelligent enterprise services The company actively lays out the AIGC field and incorporates large model technology into its products. Currently, some AI products have been applied. The collaborative intelligent assistant product has been delivered to prototype customers, providing customers with services such as intelligent collaborative office, intelligent business report analysis, and smart documents.
In the field of digital government construction, the Huawei-Zhiyuan government document model provides intelligent applications such as document receipt assistants, document writing assistants, intelligent proofreading, and auxiliary instructions, and empowers smart official document services in all scenarios.
Profit forecasting and valuation
The company focuses on the field of collaborative office software, deeply grasps opportunities for innovation, resolves its cloud transformation strategy, and continues to strengthen R&D. Future AI product implementation is expected to improve the company's growth. We expect the company's revenue for 2024-2026 to be 11.39/12.53/1,382 billion yuan, with year-on-year growth rates of 9.01%/10.06%/10.27% respectively; corresponding net profit to mother of 0.29/0.65/120 million yuan, respectively, to reverse losses in 2024. The 2025/2026 growth rates will be 123.76%/85.09%, respectively, and the corresponding PE for the current stock price will be 77.80/34.77/18.78X, maintaining the “buy” rating.
Risk warning
Core competitiveness reduces risk; market competition increases risk; COP-V8 marketing falls short of expected risk; industry policy progress falls short of expected risk.