After 23 years of deducting non-net profit, the same decrease was 19%, maintaining the “buy” rating

The company released its 23 annual report & 24Q1 quarterly report: 23 billion yuan in revenue of 5.284 billion yuan (yoy -6.54%), net profit of 528 million yuan (yoy -28.36%), net profit of 408 million yuan (yoy -18.76%); 24Q1 revenue of 936 million yuan (yoy +0.6%), net profit of 49 million yuan (yoy -65.53%), deducting non-net profit of 0.48 million yuan (yoy -42.31%). The company plans to pay a cash dividend of 17 yuan (tax included) for every 10 shares, and an increase of 4.5 shares for every 10 shares. We expect net profit to be 6.31/7.36/843 million yuan in 24-26, compared to the company's 24-year Wind unanimously expecting 25 times PE. Considering that some of the company's performance has investment income and some uncertainty about its delivery, we will give a certain discount (the discount is narrower than the previous time due to the decline in predicted investment returns), and give the 24-year PE 17X with a target price of 72.59 yuan to maintain the “buy” rating.

Due to macroeconomic influence, revenue declined in '23, and gross margin increased slightly, and revenue fell 6.5% in '23, mainly due to some consumer and internet customers cutting their investment budgets. The consolidated gross profit margin was 17.7%, an increase of 1.02pct. Sales/ management/ R&D/ finance cost ratio in 23 was 6.36%/1.18%/1.02%/0.55%, compared with 1.82pct/0.15pct/0.28pct/0.29pct. The main reason for the increase in sales expense ratio was the increase in the average number of employees in 23 compared to 22 years, and the corresponding increase in salary. 24Q1 revenue also increased by 0.6%, gross profit margin was 17.51%, and decreased by 3.85pct, mainly due to delays in advancing some large projects with high profit margins. Sales/ Management/ R&D/ Finance expenses ratio 8.39%/1.43%/1.31%/0.7%, compared with 0.8pct/-0.2pct/0.08pct/-0.02pct. The combined net interest rate decreased by 3.84pct to 5.17%.

Actively respond to market changes, strengthen internal management and improve quality and efficiency

The company actively responds to market changes, flexibly adjusts business strategies, overcomes the adverse effects of the market, and makes joint efforts in business management, customer service, internal control management, etc. In '23, the company strictly controlled risk business, strengthened business repayment management, and cash flow continued to improve. Accounts receivable at the end of '23 decreased by 701 million yuan compared to the beginning of the year, down 22.74%; the balance ratio fell from 51.06% at the beginning of the year to 40.39% at the end of the year, and the balance and liability structure was further optimized; operating cash flow improved significantly, and the net cash flow from operating activities changed from negative to positive for the whole year, exceeding 128 million yuan. The year-end monetary fund balance reached 905 million yuan, an increase of 61.99% over the previous year.

Launched multi-modal AI products in the marketing field, actively exploiting new projects and new business for 23 years, the company relied on HKUST Starfire Model 3.0 and its own many years of marketing experience and data to launch multi-modal AI products in the marketing field: “One” AI, which aims to provide advertisers with intelligent full-process marketing services including early marketing strategies, mid-term creative output, and late-stage intelligent delivery; promote the implementation of various major projects and new projects in an integrated manner, and promote special media programs such as CCTV. It provides integrated marketing services to the Sports Lottery Management Center of the State Administration of Sports, etc.

Risk warning: Macroeconomic pressure is under pressure, and AIGC technology development falls short of expectations.