The company's overall performance in '23 was under pressure, and it gradually recovered in the first quarter. The company released the 2023 annual report and the 2024 quarterly report, achieving full year revenue of 1,829 billion yuan (+7.71%), net profit to mother of 83 million yuan (-42.05%), and net profit of 61 million yuan (-40.17%) after deducting non-return to mother net profit. Looking at Q4 alone, the company's revenue was 633 million yuan (+2.32%), net profit attributable to mother was 20 million yuan (-138.34%), and net profit not attributable to mother was 25 million yuan (-161.32%). Looking at 24Q1, the company achieved revenue of 363 million yuan (+9.66%), net profit attributable to mother of 0.3 million yuan (+2.40%), and net profit not attributable to mother of 0.27 million yuan (+13.14%).
B-side business has improved markedly, with high profit growth. By the end of '23, the revenue from the B-terminal smart finance cloud SaaS business was 1,085 million yuan (+13.84%), gross margin increased to 73.86%, and realized net profit of 245 million yuan (+37.37%). For the SME customer base, the “100 Million Enterprise Finance and Tax” platform achieved ARR of 530 million yuan (+8%), 1.1 million active users, and 580,000 paying users, including 61,000 high-value users with subscription fees greater than 1980 yuan (inclusive), an increase of 77.3% over the beginning of the year. For the fiscal and tax agent customer base, the “100 Million Enterprise Account” SaaS platform achieved ARR of 520 million yuan (+24%), with an active customer base of 7.1 million users, including 5.1 million paying users, an increase of 34.2% over the beginning of the year. For innovative business customers, the company's PTS platform has served nearly 40,000 enterprises and institutions; the GTS platform has achieved breakthroughs in various industries such as brokerage, high-end manufacturing, and energy; and financial big data business services have realized value.
G-end business is under pressure, and the fourth phase of gold tax construction is expected to resume progress. By the end of '23, G-end business revenue was 738 million yuan (-0.07%), and gross profit margin was 28.86%, a decrease of 11.3 percentage points. The company serves the reform of major digital government projects and continues to increase resource guarantees. However, in recent years, user budgets have continued to be tightened, and gross margin has declined significantly, which has also led to losses in this business. In 2023, the company won the bid for the Jin4 “Taxpayer Side” core project and implemented pilot projects in 6 cities; supported the promotion and launch of Jin4's “National Standardized Electronic Taxation Bureau” in 16 provinces and cities across the country; and supported Jin4's “Application Support Platform Project” to complete the nationwide promotion and launch.
Tax compliance will become an immediate necessity, and AI will add another growth point to B-side businesses. With the revision of the new “Company Law” and the introduction of proposals relating to work in the accounting industry, especially after the fourth phase of the gold tax, various corporate tax issues are just needed. The company launched high-value products such as “Intelligent Tax Management” and “Excellent Compliance Tax”, which are expected to be the answer to the tax questions of old customers, and at the same time promote unit price growth for old customers. In '23, the company fully launched the construction of a large-scale fiscal and taxation model in the vertical field, and launched an “intelligent tax management” product in combination with AIGC technology to create a lightweight corporate tax sharing service for users and further enhance the user experience.
Risk warning: Macroeconomics affects IT spending; industry competition intensifies; new business expansion falls short of expectations.
Investment advice: Maintain a “buy” rating. Due to the slow progress of the G-side business, we have reduced our profits. Net profit due to mother for 2024-2026 is estimated to be 2.61 billion 38/28/22 million yuan (the original forecast was 418/533 million yuan for 24-25), corresponding to current PE of 38/28/22 times. Considering that the company's B-side business is still growing healthily, compliant products are expected to grow at a high rate, and G-side is expected to gradually reduce losses and maintain a “buy” rating.