Matters:
Recently, the company released its 2023 annual report and 2024 quarterly report: the company's revenue for 2023 was 3,564 billion yuan, up 0.14% year on year; net profit to mother was 1,402 billion yuan, down 17.07% year on year; net profit after deducting non-net profit was 1,369 billion yuan, down 15.27% year on year. The company's revenue for the first quarter of 2024 was 619 million yuan, up 1.47% year on year; profit due to mother was 104 million yuan, down 15.03% year on year; net profit after deducting non-return to mother was 99 million yuan, down 14.58% year on year.
Commentary:
Overall revenue remained stable, and sales promotion efforts continued to increase. The capital market fluctuated to a certain extent in the first quarter of 2023 and 2024, and investors' demand for financial information services was greatly affected. Based on the main business of financial information services, the company is steadily advancing the annual work plan, overcoming various difficulties to maintain the smooth operation of various businesses, and the overall revenue remains stable. Among them, the company's software sales and maintenance increased by 53.53% year-on-year in 2023, mainly due to the company's continuous improvement of the competitiveness of software products through artificial intelligence technology and the company's active participation in financial credit innovation work. The company continued to increase sales promotion efforts to expand market share. Sales expenses increased by 3.61 and 3.75 percentage points in the first quarter of 2023 and 2024, respectively.
R&D investment remained high, and the self-developed HiThinkGPT large model performed well. The company's R&D expenditure rates for the first quarter of 2023 and 2024 were 33.09% and 48.80%, respectively, maintaining a high level. The company is further increasing research on key technologies such as machine learning, natural language processing, intelligent speech, graphic image recognition and processing, and digital people. In particular, it is increasing the integration of technologies related to the big model of artificial intelligence with the company's existing products and service systems to provide users with better product and service quality, and further enhance the competitiveness of the company's products. In terms of large models, the company's self-research HiThinkGPT pre-trained financial corpus has reached trillion tokens, and has the characteristics of comprehensive real-time financial data, strong semantic understanding, and professional investment advice. HithinkGPT excelled in the financial scene and was able to pass professional examinations in various financial fields with high scores. The company will work to build an ecosystem based on the application of artificial intelligence technology and promote it as a new engine for the company's performance growth.
Investment advice: Considering the overall pressure on market turnover in 2023, the company's performance is highly correlated with capital market activity, so we lowered our profit forecast. The company's revenue for 2024-2026 is estimated to be 40.93 billion yuan, 4.716, and 5.253 billion yuan (49.45 billion yuan and 6.028 billion yuan before 2024-2025), and net profit to mother is 16.62 billion, 19.35 billion yuan, and 2,174 billion yuan, respectively (2.83 billion yuan and 2,670 billion yuan before 2024-2025). The corresponding EPS is 3.09, 3.60, and 4.04 yuan, respectively, and the corresponding current market value PE is 39, 34, and 30 times, respectively, adjusted to a “recommended” rating.
Risk warning: Financial market trading volume fluctuates; Internet financial policies are uncertain; large-scale model applications fall short of expectations.