Event

The new capital disclosed that the company realized operating income of 2.895 billion yuan, down 12.04% from the same period last year, realized net profit of 552 million yuan, up 80.43% over the same period last year, and realized net profit of 517 million yuan, up 103.42% over the same period last year. Net operating cash flow reached 373 million yuan, an increase of 358.50% over the same period last year.

Comments:

Gross profit margin continues to rise and profitability is enhanced. During the reporting period, 3Q23 achieved revenue of 935 million yuan, down 19.94% from the same period last year, mainly because the Jialian payment transaction was affected by license renewal and strengthening risk control compliance management. 3Q23's gross profit margin continued to rise, rising 15.62 percentage points to 39.82% compared with the same period last year. We believe that this is mainly due to the reduction in the cost of receiving business channels and the increase in the proportion of overseas electronic payment equipment business with higher gross profit margin. On the profit side, 3Q23's sales / management / R & D expense rates were 5.12%, 4.73%, 6.64%, 0.55%, 0.31%, 0.16%, 0.55%, 0.31%, 0.16%, 0.55%, 0.31%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.55%, 0.31%, 0.16%, 0.16%, 0.16%, 0.16%, 0.55%, 0.31%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%, 0.16%

The domestic order collection business is expected to get back on track. With the successful renewal of the payment license, the company gradually strengthens the channel expansion and sinking efforts, and plans to build a national service network of 100 directly operated branches in 2024, the company's order collection transaction scale is expected to gradually recover, and the domestic order collection business will also return to the right track. At the same time, the increase in fees in the payment industry is expected to further improve the profitability of the order collection business and bring flexibility.

Overseas "POS+ receipt + AI" business is developing steadily. Electronic payment equipment has achieved remarkable results in going to sea, and 1H23's overseas POS machine shipments increased by 422.51% compared with the same period last year. At the same time, the company's EU order collection operation team has been initially set up, and it is expected to be able to land order collection business in the EU market this year, with higher overseas order collection rates, and overseas order collection business will become a new growth point of the company's performance. In the field of AI, the company continues to launch and iterate various AI tools to meet the needs of overseas markets, which has achieved commercial results and is expected to provide new growth momentum for the company.

Investment advice: maintain a buy rating. It is estimated that the company's operating income from 2023 to 2025 will be 45.18 million yuan, an increase of 4.68 percent, 28.86 percent, 23.74 percent, and a year-on-year increase of 1572.19 percent, 31.83 percent, 25.87 percent, respectively.

Risk hint: the order collection business promotion is not as expected, the AI business is not as expected, etc.