The company released the 2023 interim report
In the first half of 2023, we achieved total operating income of 3.84 billion yuan, an increase of 5.0% year on year; net profit of 565 million yuan, an increase of 139.0% year on year; net profit of 596 million yuan after deducting non-attributable net profit of 596 million yuan, an increase of 94.5% year on year.
Looking at Q2 alone, we achieved total operating income of 1,938 million yuan, an increase of 4.0% year on year; realized net profit of 265 million yuan, an increase of 74.2% over the previous year; realized net profit of 347 million yuan after deducting non-return income of 347 million yuan, an increase of 175.5% over the previous year. Notably, net profit after deducting non-attributable net profit increased by 39.4% month-on-month.
There was high growth in the interim report. Among them, payment service turnover was growing rapidly, and payment service profits were growing rapidly 1) The smart terminal cluster mainly includes digital payment terminal business and smart sensing terminal business, which achieved revenue of 1,532 billion yuan, a year-on-year decrease of 7.72%. The industry's digital cluster mainly includes merchant operations and value-added services and telecom operator digital services, achieving total revenue of 2,299 billion yuan, an increase of 15.73% over the previous year.
2) What is worth paying attention to is merchant operations and value-added service businesses. In the first half of this year, the company achieved a payment service transaction scale of 1.30 trillion yuan, an increase of 17.73% over the same period last year. Meanwhile, Guotong Xingyi's subsidiary, which is mainly engaged in payment services, achieved revenue of 1,521 billion yuan in the first half of the year, an increase of 29.6% over the same period last year; in terms of profit, it reached 365 million yuan in the first half of the year and 44.13 million yuan in the same period last year, a significant increase. Judging from this, the company's payment business rate has increased; at the same time, it has achieved better cost control.
3) Looking at the cost ratio, sales expense ratio, management cost rate, and R&D expense ratio were 4.44%, 5.88%, and 7.33%, respectively. They remained the same year-on-year, with a slight decrease of 0.35 pct, and a slight decrease of 0.51 pct, respectively.
5) Net cash flow from operating activities was 1,283 million yuan, an increase of 217.87% over the previous year. This is mainly due to the continuous growth in the scale of digital payment terminal sales repayments, merchant operations and value-added services during the reporting period, the increase in cash received to provide services for products sold, and the settlement of accounts receivable from Guotong Xingyi Company, a wholly-owned subsidiary, during the reporting period due on a legal holiday at the beginning of the reporting period.
Looking at the whole year, transaction flow in the payment industry is still expected to maintain rapid growth, and the company's merchant operations and value-added services have benefited from the recovery of the general environment. Combined with its own strategic advantages, it has shown strong growth potential. The whole year is expected to bring more profit flexibility in the context of increased turnover and higher cost rates.
Investment advice
We have always emphasized that looking at 2023, there are two major highlights of the payment industry: 1) the payment industry has benefited from the recovery of the epidemic, and payment flows have rebounded rapidly; 2) the increase in payment rates has led to an increase in gross margin and a decline in fee rates for industry-related companies. Currently, judging from the mid-term report forecast, various profit data are improving positively, and it is expected that the second half of the year will continue. As a result, maintaining the previous profit forecast, it is estimated that net profit of 1,402 billion yuan, 1,558 billion yuan, and 2,044 billion yuan will be achieved from 2023 to 2025. PE corresponding to the current market value is 15 times, 12 times, and 9 times, respectively, maintaining “buying”.
Risk warning
After the epidemic recovered, offline consumption fell short of expectations; stricter regulatory policies of regulators such as the People's Bank of China; and increased competition in the industry due to factors such as the liberalization of third party payment licenses.