Recently, we have continued to track Yeahka. Over the past 24 years, the company has continued to expand overseas markets, has initially formed an overseas layout, has already carried out business in Singapore, the United States and Hong Kong, China, and is further expanding its overseas market footprint. We believe that the acceleration of the upgrading of the company's marketing strategy and the continued expansion of the marketing service coverage customer base are expected to drive the company's performance to grow by leaps and bounds.

Revenue increased significantly in '23, which is optimistic about the company's long-term profitability. The company's total revenue in '23 was 3.95 billion yuan, +15.6% year over year; adjusted EBITDA was 550 million yuan, +160.6% year over year, and the company's profitability and operating efficiency improved significantly. The company's gross profit in '23 was 740 million yuan, -28.4% year-on-year, with a gross profit margin of 18.7%, or -11.5pct year-on-year, mainly due to non-recurring revenue adjustments affecting gross profit. The revenue of the company's one-stop payment service/in-store e-commerce services/merchant solutions accounted for 88%/3%/9% of total revenue respectively in '23, +8/0/ -8pct. The revenue structure changed slightly compared to the same period last year.

The payment business GPV has increased significantly, and its leading position in the industry is stable. The company's one-stop payment service revenue reached $3.48 billion +26.5% year-on-year in '23, which is expected to be mainly due to GPV and rate increases. Among them, revenue from app-based payment services was 2.86 billion yuan, +32.4% year on year, and revenue from traditional payments was 620 million yuan, +5.1% year over year.

The company continues to deepen its layout in the field of one-stop payment services. Through continuous innovation and optimization of technology and services, the number of active payment service merchants and the number of daily transactions for app-based payments have reached record highs, and its leading position in the payment industry is stable. In the future, the company empowers commercial business through technology, which is expected to bring more customer traffic and marginal improvements in payment rates, and gradually open up room for revenue growth.

The in-store e-commerce model has been adjusted, and the business coverage continues to expand. The company's GMV exceeded 4.3 billion yuan in '23, +30.3% year-on-year, mainly due to improvements in the company's operating strategy and service quality. 23 The company's in-store e-commerce service revenue was 100 million yuan, -71.0% year-on-year. It is estimated mainly due to the transformation of the business model to a partner model and strategic concessions to users to cope with phased industry competition. The company upholds its position as a local lifestyle service aggregation platform, expands cooperation with platforms such as Meituan, Xiaohongshu, Gaode Map, and Pinduoduo, and continues to develop diversified traffic partners. The company promotes performance growth by consolidating and upgrading merchant digital marketing strategies, creates collaborative value by integrating payment and merchant solution capabilities and merchant resources, continuously expands the diversified commercial layout of in-store e-commerce services, and increases the revenue space for comprehensive in-store e-commerce services.

Merchant solutions continue to penetrate payment merchants, and revenue potential can be expected. The company's merchant solution revenue in '23 was +17.2% to $360 million, and the number of active merchant solution merchants exceeded 1.6 million, +30.8% year-on-year. The increase in revenue was mainly due to the increase in the company's ability to commercialize products and the increase in the willingness of offline merchants to pay. The future revenue growth of the company's merchant solutions may be driven by an increase in the conversion rate of payment merchants and an increase in renewal rates due to iterative product upgrades.

Investment advice: Mobile Yeahka has built an independent ecosystem and marketing platform through the payment business. We are optimistic that the company will expand its payment business by developing offline partners and bring diversified revenue streams through continuous innovation of products and services. In the future, with the upgrading and development of the company's business and the continuous expansion of overseas markets, it is expected that the revenue space for businesses such as merchant solutions/in-store e-commerce will further open up. We predict that the company's net profit for 2024-2026 will be 0.93/1.79/2.36 billion yuan (additional) billion yuan, EPS will be 0.21/0.40/0.53 yuan, and the corresponding PE (H) will be 46.1/23.8/18.1 times, maintaining the “buy” rating.

Risk warning: Competition in the receipt market has intensified, and the development of the in-store business falls short of expectations.