Description of the event

According to the 2024 quarterly report, Seiyou Co., Ltd. revealed that Q1 of 2024 achieved revenue of 363 million yuan, up 9.66% year on year; net profit to mother of 0.33 million yuan, up 2.40% year on year; net profit after deducting non-return to mother was 0.27 million yuan, up 13.14% year on year.

Incident comments

The business at both the G and B ends of the company is developing steadily. Looking at the G-side, the company's accounts receivable in Q1 in '24 was 223 million yuan, up 31.17% month-on-month. Some 23Q4 G-side projects may be deferred in 24Q1; from the B-side, the 24Q1 company's contract liabilities were 736 million yuan, an increase of 20.88% over the previous year, or reflect the steady development of the company's B-side business.

Increased gross margin and cost-side optimization. The 24Q1 company's gross profit margin was 63.77%, up 0.71 pct from the previous year. The main reason for the increase may be that the share of B-side business continues to expand. At the cost level, the 24Q1 company's expense ratio was 54.63%, down 1.02% from the previous year; looking at the split cost structure, the sales expense ratio and management expense ratio declined slightly, indicating that the company achieved certain results in controlling expenses at the sales and management level; at the same time, the R&D cost rate increased slightly, which appeared to be the company's continued efforts on the R&D side.

Jin Si entered the peak promotion period, driving G-side to reduce losses. In 2023, the company's G-side business was affected by the four-phase financial rhythm, and R&D investment pressure was high, causing G-side losses in '23. After entering 24 years, the pilot of the Golden 4 system at the State Administration of Taxation is nearing completion. It is about to shift from a product development cycle to a promotion cycle. It is expected to be fully rolled out at the provincial and municipal levels in 2024, which is expected to enter the peak period of project construction, driving the company's G-side business to reduce losses.

Jin Si is driving the tax information technology market to sink and promote the development of fiscal and taxation SaaS services. With the full rollout of the Golden Fourth Project, China's tax supervision capacity is being strengthened, and the increase in corporate tax compliance requirements is a high-certainty event. At the same time, land finance is gradually weakening, and the government also urgently needs to find ways to raise fiscal revenue; tax supervision rules for small and medium-sized enterprises may move from “big and small” to comprehensive and strict supervision, or drive the B-side tax information technology market to sink, which is conducive to the promotion of standardized fiscal and taxation SaaS services.

Investment advice: Net profit due to mother for 2024-2026 is expected to be 2.52, 4.34, and 603 million, respectively. The corresponding PE is 39.3X, 22.8X, and 16.4X, respectively, maintaining the purchase rating.

Risk warning

1. The fiscal and taxation informatization construction policy fell short of expectations;

2. Competition in the fiscal and taxation SaaS service market increases risks.