Incident: On the evening of October 25, Xindalu released its three-quarter report. The company achieved net profit of 0.819 billion yuan to mother in the first three quarters of 2024, an increase of 0.07% year on year; after deducting non-net profit of 0.822 billion yuan in the first three quarters, a year-on-year decrease of 7.75%.

Q3 The profit side continued to grow, and the payment business volume stabilized and improved. According to the company's results announcement, as of 2024Q3, the company achieved net profit of 0.289 billion yuan in a single quarter, an increase of 13.91% year on year; deducted non-net profit of 0.26 billion yuan in a single quarter, a year-on-year decrease of 11.56%. On the revenue side, the third quarter achieved revenue of 1.937 billion yuan, a year-on-year decrease of 5.29%. The company's revenue declined in the first three quarters, mainly due to the impact of the regulatory reform policy in Document No. 259, which accelerated the clearance of the third-party payment industry, and generally declined in the scale of industry transactions. The total volume of the company's transactions in the first three quarters was approximately 1.55 transactions.

The overseas business is growing steadily. In terms of the overseas business of smart terminals, the company continues to accelerate the localization deployment in countries and regions such as Europe and North America, laying a good foundation for next year's business development. At the same time, the company's overseas smart POS shipments continued to increase. Overseas smart POS shipments accounted for more than 39% of overseas shipments, creating favorable conditions for better customer service and integration into the payment product ecosystem.

The large repurchase plan and dividend plan were released simultaneously, demonstrating management's confidence. At the same time, Xindalu announced a repurchase plan. At a price of no more than 24 yuan/share, it is proposed to use 0.35-0.7 billion yuan of capital to repurchase; on the other hand, the company announced a plan to distribute dividends for the mid-2024 period as a base of 1.013 billion shares. The first three quarters of 2024 will distribute a cash dividend of 3.30 yuan (tax included) for every 10 shares, for a total discovery dividend of 0.334 billion yuan. Two major buyback and dividend plans were released simultaneously, demonstrating the company's management's confidence in future development and the importance attached to shareholder returns.

Investment advice: The company's net profit for 24-26 is estimated to be 1.115, 1.315, and 1.46 billion yuan, respectively. The current market value corresponding to the 24/25/26 valuation is 16/13/12 times, respectively. Considering the continuous improvement in the payment industry supply pattern and the further expansion of the overseas payment market, the company's main business is expected to fully benefit and maintain the “recommended” rating.

Risk warning: Increased market competition; regulatory risks; inability to continue to enjoy tax benefits; technical risks.