Shiji Information's revenue for the first three quarters increased 8.5% year-on-year, which is basically in line with market expectations

The company announced its results for the first three quarters of 2024: revenue increased 8.5% year over year to 2.016 billion yuan; net profit to mother increased 10.2% year over year to 0.016 billion yuan; net profit after deducting non-net profit of 123.9% year on year to 0.012 billion yuan.

Single quarter 3: Revenue fell 3.6% year on year to 0.634 billion yuan, down 15.5% month on month; net loss to mother increased by 0.001 billion yuan year on year to 0.009 billion yuan, from profit to loss; after deducting non-net loss, narrowed by 29.2% year on year to 0.009 billion yuan, from profit to loss. Basically in line with market expectations.

Development trends

The gross margin increased month-on-month, and the cash flow situation improved. The company's revenue for the 3rd quarter was -3.6% year-on-year. We believe it was mainly affected by the hardware business and the confirmation of some projects. In the first three quarters, the company's gross margin was -0.9ppt to 47.0% yoy, and the gross margin for the 3rd quarter was +3.9ppt to 49.0% yoy, and +5.6ppt month-on-month.

In the first three quarters, the company's total three expenses were +2.7% to 1.006 billion yuan, and the sales/management/R&D expenses rate decreased by 1.3/0.1/1.4ppt to 10.8%/27.3%/11.9% year on year; in the single third quarter, the total three expenses of the company were +6.0% to 0.343 billion yuan, and the sales expenses rate remained basically flat at 11.3% year over year, +1.2ppt, and management/R&D expenses rates were +5.7/-0.8ppt to 29.3%/13.5%, respectively. Growth 5.2/0.3ppt. We believe that as SEP continues to develop new customers and is gradually implemented globally, it is expected to contribute new performance increases and is optimistic about the company's long-term profit potential. In the first three quarters, the company's net operating cash outflow narrowed by 0.1 billion yuan to 0.022 billion yuan; the net operating cash outflow for the 3rd quarter narrowed year over year by 0.01 billion yuan to 0.047 billion yuan, changing from net inflow to net outflow from month to month.

We have continued to promote business development and have won many cooperative projects. According to the company's official announcement, in August, South Korea's HanaTour Travel Group adopted a stone-based open API interface; in October, Thailand's Chatrium Hotels Group and Singapore Park Hotel Group used a stone-based enterprise platform; in October, Thailand's Chatrium Hotels Group and Singapore Park Hotel Group adopted a stone-based enterprise platform; Australian View Hotels Group chose Shi-based Infrasys Cloud POS and Digital Dine solutions; and Australia's Sudima Hotel used Shi-based base A series of solutions for the hospitality industry. According to the company's major contract announcement on October 28, the company signed a contract with Kempinski Hotels Group to provide them with products such as SEP and Shi-based payment solutions in the form of SaaS. The next phase will launch plans for hotels in mainland China. The cloud-based enterprise-level hotel information management system launched by SEP for the company has previously been approved by Peninsula, Intercontinental, Langham, and Macau Hotels Group, and has been launched in batches at Peninsula, Intercontinental, and Langham. We believe that the signing of this agreement validates the company's core product competitiveness in the field of global hotel management and marks the company's continued expansion of product thickness among international customers. This path is expected to be replicated and promoted among other international benchmark customers.

Profit forecasting and valuation

Maintain an outperforming industry rating. Taking into account uncertainty and cost-side fluctuations, we lowered 2024/25 revenue 5%/5% to 3.056/3.467 billion yuan, and 2024/25 net profit 47%/22% to 0.051/0.148 billion yuan. We are optimistic about the increase in the company's product strength and maintain the target price of 9.5 yuan (based on SOTP). The current stock price corresponds to 6.8/6.0x 2024/25e P/S, with 25% upside.

risks

The marketing of new products has been blocked, and overseas launches have fallen short of expectations.