Incident: Jieshun Technology released its semi-annual performance report on August 26, stating that revenue for the first half of 2023 was about 653 million yuan, an increase of 44.9% over the previous year; net profit attributable to shareholders of listed companies was about 3.06 million yuan, and net profit loss attributable to shareholders of listed companies for the same period in 2022 was about 38.67 million yuan.
Traditional businesses have recovered, and the repayment cycle has improved markedly. In the first half of the year, the company's innovative business and traditional business achieved revenue of 221 million yuan and 400 million yuan, respectively, with year-on-year increases of 95% and 24%, respectively. The company's Q2 revenue increased 39% year on year, and gross profit reached 45 million yuan, up 372% year on year; gross profit margin and net interest rate reached 41% and 12% respectively, and overall business recovery was obvious. Furthermore, the company's accounts receivable turnover in the first half of the year was 188 days, compared to 317 days in the same period last year. The repayment cycle improved markedly.? The innovative business accelerated development, opening up the company's second growth curve. In the first half of the year, the company's innovative business: 1) Parking lot cloud hosting business revenue was 55 million yuan, up 71% year on year, and the total number of toll lanes managed and operated exceeded 10,000; 2) Jet parking revenue was 48 million yuan, up 29% year on year, reaching more than 110 million car owners; 3) Parking hours and parking fee business revenue was 97 million yuan, up 372% year on year, and business scale expanded at an accelerated pace. The share of innovation business in the company's total revenue has further increased to 34%, opening up a second growth curve for the company. Furthermore, the gross margin of the company's software and cloud services business in the first half of the year was 68%, an increase of 16 pct over the previous year, confirming that the company has a scale effect on software cloud services. We believe that with further growth in the company's stock of customers, its gross margin is expected to continue to increase.
Investment suggestions: As a leader in the smart parking industry, the company's innovative business has already entered the fast track of development, and the profit model is shifting from a one-time shipment of traditional hardware to a continuous and high gross margin operation model. This year is the first year for the company to accelerate growth. We expect the company to achieve operating income of 1,761/2176/2,669 billion yuan and net profit of 216.312/418 million yuan in 2023-2025. The corresponding PE for 2023-2025 will be 29/20/15 times, respectively, and maintain the “increase in holdings” rating.
Risk warning: the risk that the pace of innovative business development falls short of expectations; the risk that the recovery of traditional smart hardware business falls short of expectations; the risk that the company's business model is not adjusted as fast as expected; the risk of macroeconomic downturn.