Matters:
Recently, the company released its 2023 annual report and 2024 quarterly report: in 2023, it achieved revenue of 1,918 billion yuan, up 1.62% year on year; net profit to mother was 0.32 billion yuan, up 42.98% year on year; after deducting non-net profit of 0.26 million yuan, an increase of 188.60% year on year. The first quarter of 2024 achieved revenue of 289 million yuan, a year-on-year decrease of 2.49%; net profit to mother was -0.04 billion yuan, up 34.02% year on year; net profit after deducting non-net profit was -06 million yuan, up 21.11% year on year.
Commentary:
The level of gross margin stopped falling and stabilized, and profitability improved. In 2023, the company continued to steadily develop various main businesses, achieving operating income of 1,918 billion yuan, up 1.62% year on year; operating costs of 1,266 billion yuan, up 0.96% year on year; achieving net profit of 32 million yuan, up 42.98% year on year; and achieving gross profit margin of 34.00%, up 0.43 percentage points year on year. The company's overall gross margin level stopped falling and stabilized, and cost reduction and efficiency had a certain effect. In addition, in 2023, the company's share payment and amortization was 35 million yuan, and goodwill impairment was 0.16 million yuan. Excluding the effects of share payment and impairment of goodwill, the company achieved net profit of 86 million yuan, and profitability increased.
The customer coverage rate of medium and large banks has exceeded 96%, and core system construction contracts are at the best level. By the end of 2023, the company had cooperated with 3 policy banks, 6 large state-owned commercial banks, and all national joint stock banks; in addition, the company had a coverage rate of more than 96% of all customers with assets of 500 billion or more. In 2023, the company obtained core business system construction contracts for more than 10 banks, surpassing the best level in previous history. This includes winning the bid for a full-core system construction project for a national joint-stock commercial bank. The project is the first joint stock bank model core system construction project. As the only manufacturer with industry-specific modeling experience, the company will take the lead in advancing this landmark differentiated practice.
Firmly promote overseas market strategies and break the monopoly pattern of core systems of European and American manufacturers. In 2023, for the first time, the company helped a bank customer in the Philippines successfully launch a loan module with a 35-day historical record; announced the joint launch of the YONO Super App with Sabah Credit Company, which is wholly owned by the Malaysian Sabah State Government; and won a bid for a Thai bank to move downwards and build a new core system with a historically high contract amount. As the first Chinese company to successfully implement digital banking products in a large bank in Southeast Asia, Changliang Technology competed with the top three European and American manufacturers that have occupied this market for a long time, and has been continuously recognized by more than 10 local bank customers, breaking the market pattern where the core system of Southeast Asian banks has been monopolized by European and American manufacturers for a long time. In the future, the company will unswervingly continue to advance its overseas market strategy, move from Southeast Asia to more friendly countries, and replicate the success stories of the Southeast Asian market.
Investment advice: Considering the overall pressure on the financial IT industry in 2023, we lowered the company's profit forecast. The company's revenue for 2024-2026 is estimated to be 23.26, 28.05, and 3.279 billion yuan, respectively (before 2024-25:2900 million yuan and 3.485 billion yuan), and net profit attributable to mother was 128, 2.09, and 319 million yuan, respectively (2.42 million yuan and 337 million yuan before 2024-25). The corresponding EPS is 0.17, 0.29, and 0.44 yuan, respectively, and the corresponding current market value PE is 44, 27, and 17 times, respectively, maintaining the “recommended” rating.
Risk warning: macroeconomic fluctuations; the release of downstream demand falls short of expectations; there is uncertainty about overseas policies.