2023&1Q24 results are basically in line with market expectations

Shiji Information announced 2023&1Q24 results: revenue for 2023 increased 5.9% year-on-year to 2.75 billion yuan, at the low end of the forecast; net profit loss to mother narrowed to 105 million yuan year-on-year, in the middle of the performance forecast; loss after deducting non-net profit narrowed to 122 million yuan year-on-year, at the low end of the performance forecast, in line with market expectations. In the fourth quarter of a single year, revenue was +31.6% year over year to 891 million yuan, net loss to mother narrowed to 119 million yuan year over year, and net loss after deducting non-net loss narrowed to 127 million yuan year over year. 1Q24 revenue +12.6% YoY to $631 million; net profit attributable to mother +11.0% YoY to $111 million; net profit after deducting non-net profit +22.8% YoY to $111 million, in line with market expectations.

Development trends

Hotel information system revenue was fixed, and SaaS business ARR continued to grow. In 2023, with the recovery of China's travel consumer industry, the company's various segments of the business ushered in a significant recovery, with hotel information system revenue recovering significantly. Among them, hotel information management systems/catering information management systems/payment systems/retail information management systems/travel and leisure systems/third-party hardware support/own intelligent commercial equipment revenue was +30.1%/+9.6%/-5.0%/-13.6%/-18.7%/+22.0% to 9.4/1.1/0.8/0.3/5.4/4.9 billion yuan; 2023 The company's SaaS business ARR increased 24.6% year over year to 420 million yuan.

The net loss narrowed sharply. The company's gross margin was gradually restored in 2023, increasing 1.5ppt to 37.7% year-on-year. On the cost side, in the past three years, the company continued to invest in technology research and development to polish the moat for core products. In 2023, R&D expenses fell 27.2% year on year to 290 million yuan. We believe that the company's cost-efficiency ratio is expected to increase as the products are gradually launched to contribute to increased performance. By the end of 2023, the company's contract debt was 5.2 billion yuan, an increase of 800 million yuan over the beginning of the year. The recovery in wine tourism in '23 led to an increase in new orders.

SEP accelerates online deployment. The company's cloud catering system, InfraScloud, was rapidly promoted overseas. By the end of 2023, the total number of customers launching InfraScloud Cloud POS products had a net year-on-year increase of about 600 to 3,627, including 1,433 domestic customers, making it the only cloud POS product to sign up for all the top five global influential international hotel groups; SEP (Shiji Enterprise Platform) accelerated the pace of online deployment. By the end of 2023, SEP was in Peninsula, Intercontinental, Langting, Ruby, Sircle and other hotel groups A total of 309 hotels were launched (including 253 Intercontinental Group hotels in China), with a net year-on-year increase of about 250. We believe that the company will continue to strengthen its product and technical advantages and implement platformization and internationalization strategies, and it is expected that the international layout will gradually enter the harvest period.

Profit forecasting and valuation

Considering the uncertain pace of product deployment, the 24/25 revenue was reduced by 13%/13% to 31.2/3.48 billion yuan, and the 24/25 net profit was reduced by 33%/12% to 906/190 million yuan. Maintain the outperforming industry rating. According to the SOTP model, the target price was lowered by 9% to 10 yuan. The current stock price corresponds to 6.2/5.6x2024/25e P/S, with 40% upward space.

risks

The marketing of new products has been blocked, and overseas launches have fallen short of expectations.