Incident: In 2023, the company achieved revenue of 781 million yuan, a year-on-year increase of 11.94%, and net profit to mother of 146 million yuan, an increase of 48.14% over the previous year. In the first quarter of 2024, the company achieved operating income of 175 million yuan, a year-on-year increase of 32.35%, and net profit to mother of 16 million yuan, a year-on-year decrease of 71.98%.
Core KA customer needs are stable, and the customer service capabilities of small and medium-sized enterprises are improved through e-commerce platforms. In terms of core business, the company maintained a good cooperative relationship with KA customers, and the renewal rate for Changxie customers with annual sales of 100,000 yuan or more in 2023 was stable at 80%. At the same time, the company made positive progress in the C-end user market and launched a self-service e-commerce trading service platform for small and medium-sized enterprise users. In 2023, the e-commerce platform's transaction sales accounted for 23% of total revenue, an increase of 22 percentage points over 22 years.
The results of reducing costs and increasing efficiency have been remarkable, and investment in research and development has been increased. On the cost side, thanks to the optimization of business processes and organizational structure, the company's sales/management expense ratio decreased by 3.84/1.50 pct to 11.33%/12.86% year on year, and the R&D cost rate increased by 1.10 pct to 12.69%, mainly due to increased investment related to AIGC technology.
Actively develop AI solutions based on the advantages of content and application scenarios. The company established an “AI+ content+scenario” development strategy in 2023, using its own high-quality data, open source basic model, and closed source basic model of strategic partners to train major industry models to provide targeted solutions for customers in media publishing, advertising and marketing. At the same time, the company will also combine customer/user specific business workflows to develop AI agent intelligence to provide intelligent search, intelligent mapping, intelligent review, and one-click integration to further enhance its product service capabilities.
Profit forecast and investment suggestions: The company attracts a large number of B-side and C-side users with massive high-quality content. AI technology will help enrich the company's product ecosystem and improve service capabilities. The estimated revenue for 2024/25/26 is 9.00/10.11/11.11 yuan, respectively, +15%/+12%/+10%; net profit to mother is 1.65/1.81/197 million yuan, +13%/+10%/+9% YoY. Maintain an “Overweight” rating.
Risk warning: AIGC application development falls short of expectations, copyright protection risks, content security risks, technological change risks.