occurrences
Changliang Technology released its 2024 semi-annual report. Operating income was 0.704 billion yuan, a year-on-year decrease of 5.99%; net profit to mother was 1.84 million yuan, which changed from negative to positive; net profit after deduction was 0.35 million yuan, a year-on-year decrease of losses.
Single Q2: Operating income of 0.416 billion yuan, a year-on-year decrease of 8.27%; net profit to mother of 0.006 billion yuan, changed from negative to positive; net profit of 0.006 billion yuan after deduction, changed from negative to positive.
reviews
Revenue has been disrupted in the short term, and orders are improving in the medium term
By business, digital finance business solutions, big data application system solutions, and full-financial value chain business management solutions 2024 H1 achieved revenue of 0.454, 0.209, and 0.041 billion yuan, down 3.48%, 11.84%, and 1.37% year-on-year.
By product, software development revenue was 0.608 billion yuan, down 12.61% year on year; system integration revenue was 0.056 billion yuan, up 451.19% year on year; maintenance service was 0.04 billion yuan, down 6.33% year on year. Among them, the system integration business not only grows rapidly, but also has a high gross margin. 24 H1 gross margin is 89.01%. This business includes not only software and hardware sales services, but also the provision of intellectual property licenses (software licenses) to customers. For example, the software license fee accounts for about 10% of the $49.6 million order of Thai Huishang Bank.
The reason for the decline in the company's revenue is that the company signed some large-scale bank core system orders in 2023 and invested resources. The implementation period for related projects was 12-24 months, and revenue was not reflected in the first half of 2024. Corresponsibly, the company's inventory increased significantly by 0.089 billion yuan compared to the same period last year, an increase of 16.90% over the same period last year. Considering that the company's order amount increased by 35% compared to the same period last year (of which the 49.6 million dollar contract of Thai Huishang Bank was approved in stages, and confirmation was relatively smooth), we believe that some revenue is expected to be confirmed in 24H2 or 2025.
Gross margin has improved, and the results of cost reduction and efficiency on the cost side have been shown
The company's gross margin level increased from 36.34% in the same period last year to 38.07% in the current period, mainly due to the increase in gross margin of products related to overseas business.
In terms of cost, cost reduction and efficiency were reflected. The 24H1 sales/R&D/management expense ratio was 9.5%/16.26%/8.14%, respectively. Among them, the sales expense ratio was -1.07 pct year on year, the management cost ratio was -0.06 pct year on year, and the R&D cost rate was -1.24 pct year over year.
Steady progress, and a 49.6 million dollar order was formally signed in May
In May, the company officially signed a new core banking system project contract with the total amount of 49.6 million US dollars with the Bank of Thailand to replace the implementation contract with the largest single amount of core business system in the company's history. The project is expected to be delivered within 4 years, and revenue will be recognized in segments, which is relatively smooth.
Profit forecasting and valuation
Due to the tightening of bank budgets and the lengthening of the project acceptance process, we have adjusted our profit forecast. The company's revenue is expected to reach 2.039, 2.417, and 2.91 billion yuan in 2024-2026, with year-on-year growth rates of +6.30%, +18.57%, and +20.37%; net profit to mother is 0.107, 0.181, and 0.299 billion yuan, respectively, with year-on-year growth rates of +232.82%, +69.50%, and +64.88% year-on-year. Based on the closing price on September 5, 2024, it corresponds to 58x PE in 2024, maintaining the “buy” rating.
Risk warning
R&D falls short of expectations; overseas competitive environment deteriorates; overseas policy uncertainty; rising personnel costs