occurrences
The company released its 2024 semi-annual report. In the first half of 2024, it achieved operating income of 1.577 billion yuan, a year-on-year decrease of 19.52%; net profit to mother was 0.449 billion yuan, an increase of 34.84% year-on-year, after deducting net profit of 0.397 billion yuan.
In Q2 alone, 2024Q2 achieved revenue of 0.795 billion yuan, a year-on-year decrease of 16.07%; net profit to mother was 0.228 billion yuan, an increase of 13.91% year-on-year, and net profit not returned to mother of 0.186 billion yuan, a year-on-year decrease of 1.25%.
Key points of investment
Domestic billing business: Gross margin increased dramatically, and profits grew rapidly. Jialian Pay 2024H1, a subsidiary of the company, achieved revenue of 1.083 billion yuan from the receipt business, a year-on-year decrease of 19.16%, mainly affected by the high transaction flow base in the first half of 2023. According to the company's semi-annual report, the company processed a total transaction volume of about 722.47 billion yuan in the first half of the year, and the overall reading transaction flow remained stable, corresponding to a monthly transaction turnover of about 120.4 billion yuan. Considering: 1) the company is actively expanding scenario-based digital services to simultaneously increase customer value and customer stickiness; 2) The transaction flow base in the second half of 2023 is low, we expect the company's revenue from the receipt business to improve sequentially in the second half of the year.
In terms of profitability, the company's 2024H1 gross margin of receipt and value-added services reached 42.38%, an increase of 13.6 pct over the previous year, and achieved net profit of 0.257 billion yuan, an increase of 27.86% over the previous year, and the corresponding net interest rate reached 23.7%. Although there have been fluctuations in the volume of the billing business, the increase in gross margin has greatly offset the fluctuations caused by the decline in revenue side and brought about rapid profit growth due to the company's measures to improve quality and efficiency. We expect the profit growth trend of the company's billing business to continue in the second half of the year.
Overseas business development: Breakthrough in the European, American, and Japanese POS machine markets. The overseas revenue of the 2024H1 overseas billing business was 0.442 billion yuan, down 17.15% from the previous year. The main reason was the phased slowdown in the procurement and launch of POS machines in traditional emerging markets. However, the company achieved a clear breakthrough in high-end overseas markets in Europe, America, and Japan. Revenue in the first half of the year exceeded 0.1 billion yuan, an increase of nearly 50% over the previous year.
The overseas receipt business continues to advance. In April 2024, the company successfully obtained the Hong Kong MSO license, and the global payment license layout was further improved. Paykka, the company's cross-border payment brand, has successfully launched a series of innovative products such as overseas local receipt and B2B foreign trade payment, which has now been fully commercialized. Local receipt in the European Union landed the first receipt transaction in 2023, and the coverage and transaction volume of 2024H1 merchants grew rapidly.
Profit forecasting and valuation
Taking into account the impact of some non-operating factors, we adjusted our previous profit forecast. We expect the company's operating income for 2024-2026 to be 3.501, 3.816, and 4.438 billion yuan, respectively, and net profit to mother 0.571, 0.955, and 1.128 billion yuan, respectively. We believe that short-term infrequent disturbances do not affect the company's long-term competitiveness and profitability. In the long run, we are still optimistic about the company's profit growth and maintain a “buy” rating.
Risk warning
Policy uncertainty, risk of changes in overseas business environment, market competition risk, technology risk