Brief performance review

On October 29, 2024, the company released its three-quarter report. The first three quarters achieved revenue of 2.35 billion yuan, a year-on-year decrease of 23.1%; net profit to mother was 0.26 billion yuan, an increase of 64.4% over the previous year. Q3 achieved revenue of 0.86 billion yuan, a year-on-year decrease of 23.0%; net profit to mother was 0.1 billion yuan, an increase of 5.4% year-on-year.

Management analysis

By business, Q3's software development and services achieved revenue of 0.69 billion yuan, an increase of 6.8% over the previous year. It won bids for multiple projects in the fields of credit, supervision, digital banking, etc., and launched products such as the “Starlink” data element platform at the same time, which have already begun testing with multiple customers.

The system integration, sales service, and innovative operation business achieved revenue of 0.14 billion yuan and 0.03 billion yuan respectively, with year-on-year decreases of 67.5% and 25.7%, respectively. The company actively carried out project screening and continued optimization of the business structure, resulting in a year-on-year increase of 5.0 pct to 30.8% in gross margin. The company's contract debt reached 0.51 billion yuan, an increase of 24.9% over the same period last year, and there are sufficient orders in hand.

The company is deeply involved in the field of non-performing asset management and has set up joint ventures with Xiamen Asset Management and other partners. The company holds 40% of the shares. At present, the joint venture has completed the registration procedure for industrial and commercial establishment, and has obtained a “Business License” issued by the Commercial Service Bureau of the Hengqin Guangdong-Macao Deep Cooperation Zone, and can independently carry out business activities in accordance with the law. By participating in the transfer, revitalization and resolution of the personal loan non-performing asset disposal business process, the company will open up new space for high-quality development. In addition, the company also continued to cooperate with an agricultural commercial bank on the transformation and operation of retail credit, reached a new car installment business cooperation agreement with a number of banks, and used AI technology to help a financial company carry out intelligent marketing, and continue to expand innovative business boundaries.

Profit forecasting

According to the company's three-quarter report, we raised the company's revenue forecast for 2024-2026 to 4.24/4.46/4.73 billion yuan, up -18.6%/5.3%/6.0% year on year; the net profit forecast to mother was adjusted to 0.33/0.4/0.46 billion yuan, up 1.7%/19.3%/16.4% year on year, corresponding to 52.0x/43.6x/37.5x PE, respectively, to maintain the “buy” rating.

Risk warning

Business development falls short of expectations; industry competition intensifies; shareholders and executives risk reducing their holdings.