Incident: Bairongyun-W released its 2023 annual report. During the reporting period, the company achieved operating income of 2,681 million yuan, +30.51% year over year; realized net profit of 340 million yuan, +42.06% year over year; gross margin/net margin was 72.91%/12.51%, +0.81 pct/+1.25pct year over year.
The number of MaaS core customers increased, and customer retention increased at a high level. During the reporting period, the company's MaaS revenue was 891 million yuan, +17.33% year over year; of these, core customer revenue was 744 million yuan, +17.26% year over year.
The increase in MaaS revenue was due to a sharp rise in the number of core customers and per customer revenue. As of the end of the reporting period, the number of the company's core customers was +13.90% to 213, and the average customer revenue was +2.95% YoY to 3.4953 million yuan. The core customer retention rate continued to rise at a high level, +1pct to 99% year over year, and customer satisfaction +1.5pct to 97% year over year.
The scale of cloud asset transactions in the BaaS financial industry is growing rapidly. In terms of scale, the company's stock deepened cooperation with institutional customers, and incrementally used the customer acquisition advantages of generative AI to expand customers, and nearly doubled the scale of asset transactions over the same period last year. The scale of asset transactions facilitated by the BaaS financial industry cloud during the reporting period was +93.34% over the same period last year to 53.130 billion yuan. In terms of rate, the company's technical rate in '23 was 2.23%, -0.48pct year-on-year. The expansion in the scale of asset transactions supported the rapid increase in cloud revenue in the BaaS financial industry. During the reporting period, the company's BaaS financial industry's cloud revenue was 1,185 billion yuan, +58.80% over the same period last year.
Cloud revenue growth in the BaaS insurance industry is slowing down. During the reporting period, premiums contributed by the cloud in the company's SaaS insurance industry were +56.13% to 3.30 billion yuan. First-year premiums and renewal premiums showed differentiation. First-year premiums were +72.35% YoY to 1,953 billion yuan, growth rate +38.57 pct YoY, renewal premiums +37.74% YoY to 1,378 billion yuan, growth rate -10.97 pct YoY. Affected by the integration of insurance industry reporting and banking, the cloud revenue growth rate of the company's BaaS insurance industry was slower than the growth rate of premium income; during the reporting period, the cloud revenue of the company's BaaS insurance industry was 605 million yuan, +10.29% year-on-year, with first-year/renewal premium revenue of 508/97 million yuan, +12.08%/+1.73% year-on-year.
Expense management increases and decreases are appropriate, and asset impairment accruals have increased. During the reporting period, the company's R&D expenses/ general and administrative expenses/ sales and management expenses were $3.79/2.59/10.73 billion, +2.47%/-3.96%/+36.75% year-on-year. The increase in the company's R&D expenditure was mainly due to the increase in employee costs for R&D personnel. The increase in R&D expenditure was limited due to the transfer of some software personnel to outsourcing and increasing the use of BR-coder, a generative AI code generator; the company effectively controlled general and administrative expenses, but increased sales and marketing expenses to increase brand awareness. The company's impairment accrual increased by 80 million yuan during the reporting period, mainly due to impairment of goodwill relating to the acquisition of Zhonglian by 61 million yuan.
Investment advice: The company's MaaS business continues to enrich its product portfolio, expand application scenarios and deepen customer value contributions, and has strong growth stability; BaaS is still in a period of rapid growth, and the vertical model has significant advantages, and is expected to maintain rapid growth. We expect the company's revenue for 2024-2026 to be 31.80, 38.39, and 4.436 billion yuan, respectively; net profit to mother will be 4.25, 5.41, and 609 million yuan; EPS will be 0.87, 1.10, and 1.24 yuan/share; PE corresponding to the closing price on April 2 will be 11.80x, 9.28x, and 8.25x. Maintain a “buy” rating.
Risk warning: poor macroeconomic environment, loss of core customers, drastic tightening of regulatory policies