Revenue growth is picking up, and an inflection point in performance is expected. In 2023, the company achieved operating income of 9.796 billion yuan, an increase of 5.8% over the previous year, and net profit of 967 million yuan to mother. In Q1 2024, the company achieved operating income of 1,749 million yuan, an increase of 18.61% year on year; net profit to mother - 453 million yuan, an increase of 14.11% year on year, mainly affected by a year-on-year decrease of 106 million yuan in revenue from changes in fair value.
The gross margin level rebounded in 24Q1, and cost control was beginning to bear fruit. In 2023, due to the impact of the organizational model upgrade, the contract amount growth rate fell 5.6% in the first half of the year, and the company's gross margin was 50.73%, a year-on-year decrease of 5.64 pcts. The growth rate of contract amounts returned to more than 20% in the second half of '23, providing strong support for the recovery of performance growth in '24. In Q1, the company focused on optimizing the organizational structure and personnel, and the gross margin increased to 50.85%, an increase of 6.27pct over the previous year. In terms of cost ratios, sales/management/R&D expenses were 29.19%/16.80%/31.35%, respectively, -1.97pct/+0.70pct/ -1.94pct, respectively. With the end of organizational model changes and the release of product revenue capacity, the company is expected to usher in an inflection point in performance in '24.
Diverse AI products continue to be iterated, and the expansion of functions strengthens the company's core competitive barriers. In 2023, the company released YongPT, the industry's first major enterprise service model, further released BIP3-R2 with more powerful performance, and continued to expand the product line and product functions. The intelligent product “Zhiyou” optimizes and upgrades the interactive experience to complete intelligent scenario development applications such as BIP knowledge quiz, ChatBI reports, and approval process review; the “Smart Search” product enhances performance in terms of permission control, tag management and knowledge filtering, and corporate thesaurus. The company has established a BIP digital intelligence foundation and is steadily advancing the commercialization of the AI product line. YonBip achieved a contract amount of 3.61 billion yuan for the full year of '23, and the renewal rate for core products reached 92.9%. BIP3 delivered 108 model users, and central state-owned enterprises such as COFCO, the Three Gorges Group, and Three Gorges Energy successfully launched digital intelligence projects in the fields of finance, manpower, and procurement based on BIP.
The Globalization 2.0 strategy was fully launched, and the advantages of multiplier intelligence were used to build a global market system. The company launched the Globalization 2.0 strategy and began expanding the European, North American, Middle Eastern and Japanese markets while continuing to consolidate business markets in Hong Kong, Macao, Taiwan and Southeast Asia. Launched the new product “Youyou BIP Business Network” for global customers to build a digitally intelligent, globalized, open and secure global business network.
Risk warning: The core product market falls short of expectations, market competition intensifies, cloud transformation falls short of expected investment suggestions: The company's revenue for 2024-2026 is estimated to be 111.95/128.11/14.681 billion yuan, corresponding to 3.39/2.97/2.59 times the current PS. Using the PS relative valuation method, we selected comparable companies in the same industry, Kingdee International, Hang Seng Electronics, and Guanglianda as comparable companies in the same industry. According to Wind, the average PS of comparable companies in 2024 is 3.81 times. Considering the gradual narrowing of the decline in the company's traditional software business, the expansion of demand for cloud services, and the gradual recovery in demand from major customers, we gave the company 4-4.4 times PS in 2024, with an estimated reasonable valuation of 11.84-13.03 yuan. Covered for the first time, it was given an “superior to the market” rating.