The 2022 performance fell short of our expectations. The 1Q23 revenue fell short of our expectations, and the profit was in line with our expectations. The company announced its 2022 results: revenue of 494 million yuan, -9% year on year; net profit of the mother was 179 million yuan, an increase in loss over the previous year; net profit of the non-return mother was 188 million yuan, an increase in year-on-year losses. In 2022, due to the impact of the macro environment and repeated epidemics, etc., the digital investment of downstream small and medium-sized e-commerce customers declined, which led to a slowdown in the company's revenue growth rate, compounded by increased investment in continuous research and development of merchant products. The performance fell short of our expectations.
The company announced 1Q23 results: revenue of 110 million yuan, -11% year on year; net profit of the mother - 17 million yuan, net profit of the non-return mother - 18 million yuan, the loss narrowed year-on-year. 1Q23 Downstream customers have not fully resumed normal operations. The company's revenue is lower than our expectations, and profits are in line with our expectations.
Development trends
The revenue structure continues to be optimized, and the hardware and operating business has shrunk. Looking at the revenue structure, the share of e-commerce SaaS with high gross profit of the company in 2022 was +6ppt to 82% year on year. The decline in overall revenue growth was mainly due to hardware/operating business revenue of -8% /- 61% year-on-year, respectively. The growth rate of SaaS products from large merchants is steady, and SaaS for small and medium-sized businesses continues to expand on multiple platforms. Product revenue from the company's core merchants maintained a 26% year-on-year growth rate in 2022. Among them, the number of effective paying users of Kuaimai ERP maintained an increase of more than 15%, and the revenue of the Kuaimai Xiaozhi customer service robot after the collaboration and upgrade with Xiaomi in Alibaba was +738% compared to the same period last year. In 2022, the SaaS revenue of small and medium-sized e-commerce was greatly affected by macroeconomics and declined, but multi-platform expansion achieved remarkable results. The share of foreign exchange revenue increased 6ppt to 36% year-on-year, with Douyin platform revenue +165% year-on-year.
Furthermore, the company's gross margin declined in 2022, but 1Q23 has already rebounded month-on-month. At the same time, losses in 2022 increased year-on-year under the combined influence of the company's continued investment in R&D, but 1Q23 has seen a year-on-year loss reduction trend.
The company has already implemented mature products in the e-commerce x AI field, and it is expected that iteration will be further strengthened in the future. We believe that e-commerce is one of the important scenarios for the future implementation of AI applications. The company has been deeply involved for many years, and mature products such as intelligent art robots and smart customer products have been implemented. Among them, the Deep Drawing Art Robot uses image processing algorithms and detail page layout technology to support batch automated production of product detail pages; the intelligent customer service robot is based on NLP technology and upgraded in cooperation with Xiaomi in Alibaba in March 2022. We believe that the company has scenario advantages, and it is expected that AI will be used to further enhance product strength in the future. At the same time, demand will gradually recover due to favorable macro-environment demand, and performance is expected to continue to improve. The implementation of the fixed increase is progressing smoothly. The company's planned increase of 177 million yuan was approved and successfully issued at the end of January, and the long-term development of the company was again strongly guaranteed.
Profit forecasting and valuation
1Q23 Downstream customer operations are still affected by macroeconomics, and annual cost investment is uncertain. The 2023 revenue forecast was lowered 16% to 584 million yuan, and the 2023 profit forecast was adjusted from -33 million yuan to -67 million yuan. Introduce revenue and profit forecasts of $706/30 million for 2024. Recently, the industry valuation center has risen. We have maintained an upward trend in industry ratings, and raised our target price by 82% to 20 yuan (downstream customer demand will gradually recover in 2023, and it is expected that the company's 2024 performance will return to the normal operating rhythm and switch to SOTP 2024), which has 8% room for an upward trend compared to the current stock price.
risks
The number of paying users for traditional products declined; promotion of new products fell short of expectations; cost investment exceeded expectations.