The increase rating was maintained, and the target price was lowered to 82.29 yuan (-19.47 yuan). Considering that the company's investment in the dual transformation strategy will continue, there is still a certain impact on performance. The company's EPS forecast for 2024-2026 (additional 2026) is -0.33 (-0.21), 0.18 (-0.27), and 0.59 yuan. The company was given 11.15 times PS in 2024, the target price was lowered to 82.29 yuan, and the “gain” rating was maintained.
Affected by the subscription transformation, the company's apparent revenue growth rate has slowed. The company's revenue in 2023 was 611 million yuan, an increase of 5.33% over the previous year, and achieved net profit of 99.41 million yuan to mother. There has been no significant increase in revenue, which is still due to deepening and accelerated subscription transformation. On the one hand, permanent license revenue declined during the transformation process. Furthermore, under the subscription model, revenue was confirmed in installments rather than one-time confirmation, and the subscription price of the core product PDF Editor was lower than that of a permanent license. Therefore, due to the subscription transformation, the company's apparent revenue growth rate slowed down.
Subscriptions and channels have achieved remarkable results, and the share of revenue continues to rise. In 2024, Q1 achieved subscription revenue of 74.3785 million yuan, an increase of 73.30% over the previous year, and the ARR amount for the Q1 subscription business was 281 million yuan. 2024Q1 channel revenue was 63.1871 million yuan, up 49.01% year on year, accounting for 37.44% of revenue. The growth rate of subscription and channel share is good, highlighting the steady progress of the dual transformation strategy.
The product experience continues to improve, and the Hongmeng native app will be launched. The company continues to iteratively optimize the AI functions integrated into the core PDF editor and gradually implement the AI-based PDF function instructions. The implemented conventional document interaction functions such as document summarization, content rewriting, guaranteed translation, grammar & spelling correction can go through many iterations, and the product experience continues to improve. In January 2024, the company signed a software agency agreement with the core PC channel provider, and the channel cooperation came to fruition. In March 2024, the company signed a Hongmeng Ecological Cooperation Agreement with the Huawei Group, announcing that it will launch Hongmeng's native application development based on HarmonyOS NEXT Hongmeng Xinghe Edition. With the continuous empowerment of ecological partners, we believe that the influence of the company's products is expected to increase rapidly, and domestic market penetration may accelerate.
Risk warning: AI R&D results fall short of expectations, risk of environmental fluctuations in overseas markets.