Leading domestic data analysis, and customer base advantages continue to consolidate its position as a leading AI technology service provider in China. With its deep technical accumulation in the field of decision-making AI and generative AI, Bairongyun provides full-process digital intelligent services to Baixingqian industries through cloud+ localization deployment and MaaS+BaaS service models, significantly improving automated approval rates and risk management efficiency, and helping the Internet credit business achieve rapid growth. According to data disclosed by the company, Bairong Yunchuang's AI model is called more than 300 million times a day, and the stability of the cloud platform is as high as 99.998%. Product development with actual scenario business as a pain point is very popular in the market. The company is rooted in cumulative data advantages in various fields. Currently, it has accumulated more than 7,000 institutional customers, covering 6 major state-owned banks, 12 national joint-stock banks, thousands of urban agricultural commercial banks, insurance companies and other financial institutions, and various vertical enterprise customers. In 2023, the company's customer retention rate was 99%, customer satisfaction was 97%, and it already has customer stickiness and sustainable profitability.
The company's revenue growth rate is strong, and the profit side continues to benefit
With its high market share in the data analysis field and active layout in the field of generative AI, the company has achieved steady growth in MaaS business revenue and rapid growth in BaaS business revenue. The total revenue growth rate of FY2023 was significant, mainly due to the revenue leap of BaaS as the financial industry cloud. Currently, the company mainly increases profits by increasing revenue rather than reducing costs. While its expenses continue to grow, it has achieved considerable profits. From FY2019 to FY2023, the share of the company's three expenses in revenue declined year by year, and adjusted net profit and net interest rates continued to increase. In the future, the company's internal AI model will work together to reduce costs and increase the efficiency of its internal business while monetizing the company's technology, so that the cost side can be effectively controlled, and it is expected that breakthroughs will be achieved on the profit side in the future.
The wave of digital intelligence is surging, and the rise of industry models is accelerating
With the release of the “Digital China Construction Overall Layout Plan” and the continued advancement of fintech development plans, Chinese fintech companies are facing unprecedented opportunities. Strong policy support and continuous advances in technology have promoted the rapid development of financial digital intelligence. Despite facing challenges such as lack of credit reporting data, uneven credit reporting systems, and an increase in non-performing loans, the digital transformation and intelligent upgrading of financial services is expected to accelerate the resolution of past problems through the widespread application of big data and artificial intelligence technology. At the same time, compared to the general model, the big industry model shows strong potential for implementation. It can not only accurately adapt to specific business needs, but also effectively improve risk management capabilities. With the continuous advancement of technology and the deepening promotion of policies, the development of large-scale industry models will be the core driving force for the digital transformation of finance. It is expected to strongly improve the efficiency of financial services and improve risk control capabilities, bringing profound changes to the financial industry.
Profit forecasting
We believe that with the gradual expansion of the company's business into the non-financial sector and the advantages of the speed of implementation of large industry models, the company has great potential for future revenue growth. We forecast that FY2024-FY2026's total revenue will be 30.8/37.0/4.34 billion yuan, respectively, and net profit to mother will be 3.9/5.3/580 million yuan, respectively. Considering the company's business attributes, we selected Yuxin Technology, Huiliang Technology, Hang Seng Electronics, Qianfang Technology, Huitongda, and Fluorite Network as comparable companies. The average PE of comparable companies in FY2024 was 23.33. Considering the Hong Kong stock liquidity discount, the company was given 18 times the average PE in 2024, corresponding to a market value of 7.02 billion yuan and a target stock price of HK$15.50, giving it a “buy” rating.
Risk warning: The liquidity of the Hong Kong stock market falls short of expectations, the development and application of AI technology falls short of expectations, macroeconomic recovery falls short of expectations, the company's cost control falls short of expectations, risk of differences in valuation systems, risks related to data confidentiality and law, risk of not being able to renew a company license