Brief performance review
On April 29, 2024, the company released its 2024 quarterly report. The company achieved revenue of 1.19 billion yuan in the first quarter of 2024, a year-on-year increase of 5.1%; realized net profit attributable to mother of -036 million yuan, turning a year-on-year loss; realized net profit of 21 million yuan after deduction, a year-on-year decrease of 71.3%.
Management analysis
Overall, revenue growth was in line with expectations. Since the fourth quarter of 2023, the company's revenue growth rate has slowed. We believe it is mainly due to the decline in the IT budget execution rate of financial institutions, which has affected the acceptance and repayment of some businesses. Corresponsibly, the company's accounts receivable and contract liabilities in the first quarter were also under slight pressure. By business, the pressure on brokerage customers was slightly higher. Fortune Technology, Risk and Platform Technology businesses were all under pressure in the first quarter of 2024, falling 20.3% and 7.8% year-on-year respectively. Asset management clients performed better than expected. Asset Management Technology, Operations, and Institutional Technology continued to increase 13.6% and 20.1% year-on-year respectively in the first quarter of 2024 without a significant slowdown in acceptance in the fourth quarter of 2023. The core business of corporate finance and insurance was also better than expected, with a year-on-year increase of 31.9% in the first quarter of 2024.
The year-on-year change in net profit to the mother was mainly due to a loss of 67 million yuan due to changes in fair value; the decline in net profit after deduction was mainly due to a loss of 0.26 million yuan in investment income for joint ventures and joint ventures. If this part of the impact is excluded, the company's net profit without deduction to mother was 48 million yuan, an increase of 38% over the previous year, faster than the revenue growth rate. The company's Q1 costs increased 4.8% year-on-year, and still maintained good cost control.
For the whole year, the company expects steady revenue growth in 2024, with expenses growing at a lower rate than revenue. We expect the company to continue improving quality and efficiency in 2024. According to the company's previous stock option incentive plan, the company's target for 2024 is revenue growth of 0% (trigger value) to 15% (target value), and net profit growth of not less than 10%. As the company's core system, Xinchuang, is gradually setting the benchmark, it is expected to bring potential batch delivery opportunities.
Profit Forecasts, Valuations, and Ratings
Based on expectations for steady growth in the industry, we expect the company's revenue from 2024 to 2026 to be 76.8/84.2/9.23 billion yuan, up 5.5%/9.6%/9.7% year on year; net profit to mother will be 15.0/18.2/2.14 billion yuan respectively, up 5.0%/21.6%/17.7% year on year, corresponding to 28.2/23.2/19.7 times PE, respectively, to maintain the “buy” rating.
Risk warning
Financial industry demand falls short of expectations; corporate fee control falls short of expectations; the pace of policy implementation falls short of expectations; competitive risks.