The non-financial IT business dragged down the company's overall performance in the first three quarters. The two cornerstones of securities & asset management IT showed resilience. On the basis of consolidating the two cornerstone businesses, the company focused on developing the third cornerstone business of self-operated technology.
Incident: The company released a report for the third quarter of 2024. In the first three quarters, it achieved operating income of 3.478 billion yuan, YoY -14.07%; realized net profit due to mother -0.115 billion yuan, year-on-year profit and loss; realized net profit deducted from non-mother of -0.149 billion yuan, increasing year-on-year losses; and achieved net operating cash flow of -0.023 billion yuan, YoY +95.67%.
Q3 achieved revenue of 1.131 billion yuan in a single quarter, YoY -14.35%; realized net profit attributable to mother -0.035 billion yuan, YoY -41.21%; realized net profit deducted from non-mother -0.045 billion yuan, YoY +21.02%.
The two cornerstones of securities & asset management IT showed resilience, and the non-financial IT business dragged down overall performance. The company's revenue declined in the first three quarters. We believe that revenue from non-financial businesses, especially IT equipment distribution, fell a lot (-21.86% year on year), and financial IT business revenue was basically the same as the same period last year; in terms of securities & asset management IT business, the company's securities IT business revenue in the first three quarters was 0.33 billion yuan, down 17.97% year on year; asset management IT business achieved revenue of 0.124 billion yuan, up 37.55% year on year. We consider that the decline in profits is mainly affected by non-financial IT business. Among them, projects in the digital economy sector are affected by market changes, repayment cycles have been lengthened, credit loss rates are expected to rise, and the amount of asset impairment losses accrued has increased year-on-year.
The Xinchuang+ policy continues to drive the growth of the double cornerstone business and actively expand the third cornerstone business of proprietary technology. In terms of securities IT, the company's next-generation securities business integrated service platform FS2.5 was successfully launched on CICC Wealth Securities, and the FS2.5 account management system was launched on CITIC Construction Investment Securities. FS2.5 fully supports Xinchuang, and the core technical level uses a distributed low latency architecture platform with completely independent intellectual property rights. In terms of policy business, during the reporting period, the company continued to provide software upgrades and technical service support for core Jinzheng counter customers around hot businesses such as Beijing Stock Exchange bond trading, Beijing Stock Exchange independent code segment transformation, and cross-border financial management access.
In terms of asset management IT, the company's next-generation investment transaction A8 system has implemented compliance risk control indicators and static risk control for leading brokerage projects, and the launch of conventional equity fixed income command technology. On the basis of consolidating the two cornerstone businesses of securities IT and asset management IT, the company focuses on developing the third cornerstone business of proprietary technology. Currently, it has launched an integrated solution before, during and after FICC, and successfully won the bid for the Northeast Securities and Haitong Securities projects in the third quarter.
Maintain a “Highly Recommended” investment rating. Net profit due to mother in 24-26 was lowered to 0.386/0.462/0.545 billion yuan, maintaining the “Highly Recommended” rating.
Risk warning: Policy implementation falls short of expectations, industry competition intensifies, and AI application R&D progress falls short of expectations.