Incident: Yixin Group released its 23-year financial report and 24Q1 performance report. The Group achieved revenue/ adjusted net profit of 66.86/910 billion yuan (RMB, same below), +28.55%/+32.27% year-on-year, diluted EPS was 0.083 yuan/share, +48.21% year-on-year, and the diluted ROE was 3.52%, +1.1 pct year-on-year. 87.97 million shares have been granted under the second equity incentive plan. After the 2024 share plan comes into effect, the company proposes to grant a total of 250 million share options. 24Q1's automobile financing transaction volume (including new passenger cars and used passenger cars) increased 10.2% year over year, with new energy vehicle financing transactions increasing 88.6% year over year.

The business layout is clear and ahead of schedule, and multiple sectors have achieved explosive growth. The Group provides customers with one-stop, comprehensive and diversified automobile financing services and platform trading services that include the complete vehicle life cycle, and has a particularly broad layout in low-tier cities. Core business aspects: (1) Financial leasing business: achieved revenue of 1.57 billion yuan, +32% year-on-year, and +66% revenue from new transactions during the reporting period. The Group achieved a financing amount of 402.05/25.744 billion yuan for new and used vehicles throughout the year, +57%/-6% year-on-year; of these, the NEV business achieved a transaction volume of 12.405 billion yuan, +200% year-on-year. The Group actively adapts to the NEV sales model and cooperates with OEMs. Currently, more than 25 traditional OEMs and more than 10 NEV brands have cooperated in depth with the Group. (2) SAAS services: Self-developed AI models to enable business growth with fintech (SaaS) to provide risk management and core asset management systems to OEMs, third-party financial institutions, and technology companies. The reporting period achieved RMB 463 million in revenue, +280% over the same period. In new vehicle transactions completed through the SaaS model, the NEV penetration rate reached 40%. (3) Other platform services: Innovative services such as battery leasing and battery GAP insurance were launched on the basis of GPS, maintenance products and services. At the same time, the number of guaranteed customers continued to increase, achieving value-added services/guarantee business revenue of 225/963 million yuan, +23%/+83% over the same period last year.

Asset quality has remained stable, and business costs have risen. The Group has established a comprehensive risk management and internal control system to increase risk control over the financing guarantee business, actively reduce the scale of high-risk products (used car profits are higher) in the context of economic pressure throughout the year, reduce the used car business financing amount to 41% of the total financing amount, and at the same time complete more new car transactions with low loss rates and good asset performance. Affected by this, the average return on net receivable financial leases was 8.2%, compared to the previous value of -1.1 pct. The estimated loss of various credit depreciation values decreased by -8% to 792 million yuan. The average capital cost of the Group decreased from 5.3% to 5.3% to 4.9%. On the other hand, the gross margin of the trading platform business/proprietary financing business is 6pct/8pct compared to the previous value, mainly due to increased competition and increased borrowing for supplementary financing funds.

Investment suggestions: Yixin Group achieved double growth in revenue and net profit in 2023. The company's credit business for new cars and new energy vehicles increased significantly, used fintech to develop markets, actively lay out low-tier cities, and there is plenty of room for future growth. In terms of specific business, many sectors are growing rapidly, and the business layout is clear. Continuously improving risk control levels and internal controls ensure stable asset quality. The company's revenue for 2024-2026 is estimated to be 84.83/99.05/11.725 billion yuan, net profit to mother of 8.20/11.08/1,555 million yuan, and diluted earnings per share of 0.13/0.17/0.24 yuan/share. The PE valuation corresponding to the closing price on June 19 is 5.10/3.78/2.69 times. Give it an “gain” rating.

Risk warning: Macroeconomic growth is declining, new energy vehicle export taxes, and interest rates fluctuate beyond expectations.