Description of the event
On March 29, 2024, Hang Seng Electronics released its 2024 quarterly report: The company achieved revenue of 1,188 billion yuan in 24Q1, yoy +5.13%, which was basically in line with expectations; realized net loss due to mother of 0.36 million yuan, yoy -116.28%, which turned loss year on year; realized net profit without return to mother of 121 million yuan, yoy -71.28%. The profit side was greatly affected by profit and loss from changes in investment income and fair value.
Incident comments
Revenue side growth was steady in 24Q1, and industry beta caused revenue growth to slow down. By business, the Fortune Technology/Asset Management Technology/Operations and Institutional Technology businesses, which had the largest revenue share, achieved revenue of 224/2.83/234 million yuan respectively, with year-on-year growth rates of -20.34%/13.64%/20.07%, respectively. We believe that the overall slowdown in revenue side growth is due to changes in industry beta.
Overall, the company's business situation is still steady, and revenue is supported by diversification. By business line, in terms of asset management technology services, O45 has completed full-stack Xinchuang R&D. The 23-year report revealed that 53 new customers have been signed, and 24 customers have been completed. Among them, the completion of key projects such as the Huabao Fund O45 project is a good start for subsequent batch delivery. The business level of Fortune Technology services is also progressing steadily. UF3.0 has completed the pilot launch of the entire Xinchuang transaction link in China Merchants Securities, and has entered the Xinchuang batch launch stage. In terms of operation and institutional technology services, the 23-year report revealed that the next-generation TA in the operation management business field signed nearly 100 new customers and completed the launch of the leading customers; 18 Internet TAs were launched; the next-generation valuation system signed more than 30 customers and replaced friends with leading fund customers. The growth rate of the rest of the business is stable, forming effective and diversified support for revenue.
The 24Q1 profit side is greatly affected by investment income and fair value changes profit and loss. From the perspective of investment income, the 23Q1 company's investment income was 44.58 million yuan, and the 24Q1 company's investment income was 1.51 million yuan, which was a significant decrease compared to the same period last year, mainly due to loss of investment income of 0.26 million yuan in joint ventures and joint ventures; from the perspective of fair value changes, 23Q1 achieved revenue of 164 million yuan, and 24Q1 lost 66.95 million yuan.
The company's business goals for 2024 are to maintain steady revenue growth, continuously improve the quality of the company's revenue, keep expenses below revenue growth, continue to improve operating efficiency, and maintain a steady financial structure and operating cash flow. We expect the company's revenue from 2024 to 2026 to be 77.1/84.5/9.33 billion yuan, respectively, and net profit to mother of 15.2/18.1/2 billion yuan, respectively, corresponding to 25.61/21.58/17.57 times PE, respectively, to maintain a “buy” rating.
Risk warning
1. Competition in the financial IT industry intensifies risks;
2. Technological development falls short of expected risks.