In H1 2024, Zhongke Jiangnan achieved operating revenue of 0.364 billion yuan, a year-on-year decrease of 21.13%; achieved a net profit attributable to shareholders of 0.033 billion yuan, a year-on-year decrease of 68.78%; The company's revenue and net profit both declined, mainly due to increased business expansion costs, adjustments in budget support from major clients, and increased share-based payment expenses and employee compensation costs.
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According to Caixin, Zhongke Jiangnan (301153.SZ), which is deeply involved in digital finance, saw a decline in both operating revenue and net profit in the first half of the year due to factors such as increased investment in research and development and marketing.
According to the financial report, in H1 2024, the company achieved operating revenue of 0.364 billion yuan, a year-on-year decrease of 21.13%; achieved a net profit attributable to shareholders of 0.033 billion yuan, a year-on-year decrease of 68.78%; Non-GAAP net profit attributable to shareholders was 0.03 billion yuan, a year-on-year decrease of 68.72%. In addition, the net cash flow from operating activities also decreased by 123.16% year-on-year.
This is also the first time that Zhongke Jiangnan has seen a decline in both revenue and net profit in its interim report since 2020. This situation is mainly due to increased business expansion costs, adjustments in budget support from major clients, and increased share-based payment expenses and employee compensation costs.
Regarding business expansion, Zhongke Jiangnan stated that while deepening its core business, the company has also increased efforts in other non-fiscal areas such as electronic tickets, medical insurance, and trademarks. The pre-project preparation, research and development expenses, and marketing investment in these areas have brought significant upfront expansion costs, and no substantial income has been generated in the reporting period, which has had a certain impact on the company's profitability.
Caixin reporters noted that in the first half of the year, Zhongke Jiangnan's research and development investment amounted to a total of 0.1224 billion yuan, a year-on-year increase of 19.45%, accounting for 33.63% of the operating revenue. In addition, during the reporting period, Zhongke Jiangnan accumulated share-based payment expenses of 0.043 billion yuan for the period from January to June 2024, a year-on-year increase of 75.50%, which also had a certain impact on the company's profits.
In terms of products, the three main products: payment electronicization, operation and value-added services, and integrated budget management have contributed significantly to the company's revenue. Among them, payment electronicization accounts for nearly 40% of the total revenue, achieving 0.139 billion yuan in the first half of the year, although it decreased by 45.61% compared to the same period last year. Regarding payment electronicization, Zhongke Jiangnan completed the implementation work for 49 fiscal ends and 411 bank outlets during the reporting period.
In the first half of the year, operation and value-added services generated revenue of 10.5 billion yuan, a year-on-year growth of 70.07%; integrated budget management achieved revenue of 6 billion yuan, a year-on-year decrease of 43.82%.
It is worth noting that the electronic business of the industry and the cloud services of budget units achieved revenues of 2.4 billion yuan and 31 million yuan respectively. Compared to the total revenue, their proportions are relatively low, but the growth rates should not be ignored. In the first half of the year, their incomes increased by 85.64% and 88.65% respectively.
In terms of electronic business in the industry, Zhongke Jiangnan mainly provides blockchain, electronic voucher archive, electronic seal, digital letters, electronic licenses, and digital RMB applications to government agencies, medical insurance units, and administrative institutions. Specifically, for electronic licenses, the company is currently involved in areas such as certified public accountants' practicing certificates, certified public accountants' certificates, and trademark certificates.
In terms of news, the Ministry of Transportation issued a document on August 14 stating that the electronic licenses for road transportation should be widely promoted. In response to whether Zhongke Jiangnan has layout in this segment, the company responded on the investor platform, "The company has sufficient technical reserves and will make reasonable arrangements based on market demand and company's strategic planning."