On January 26, 2024, the company released its 2023 annual report. The company achieved revenue of 1,113 billion yuan for the full year of 2023, a year-on-year decrease of 11.3%; net profit after deduction of 65 million yuan, a year-on-year decrease of -80.4%. The company achieved revenue of 429 million yuan in Q4 in 2023, an increase of 178.6% over the previous year; realized net profit after deduction of 114 million yuan, an increase of 395.3% over the previous year.
By business: 1) Financial Information Services's revenue in 2023 reached 950 million yuan, down 19.6% year on year, mainly due to the 5.2% year-on-year decline in average daily turnover of A shares in 2023, and due to the external environment and a decrease in the company's middle and high-end customer accumulation in 2022; however, due to the ideal sales of the company's high-end products in Q4 in 2023, the revenue of financial information services increased 69.6% year on year in the second half of 2023. The accumulation of mid-to-high-end customers in 2023 is also expected to fuel operations in 2024. 2) McGow Securities turned net profit into profit in 2023. Among them, net income from handling fees and commissions was $92 million, up 161.3% year on year; net income from interest was $34 million, up 103.4% year on year; income from proprietary investment was 70 million yuan, up 450.1% year on year. At the end of 2023, customer deposits of McGow Securities reached 2.08 billion yuan, an increase of 108% over the previous year; securities brokerage transactions were 2.41 billion yuan, an increase of 108% over the previous year, and the overall customer deposit and securities trading business grew positively.
Expenses: 1) Sales expenses in 2023 were 550 million yuan, the same as the previous year. Among them, sales expenses increased 70.8% year-on-year in Q4 in 2023, which is expected to be mainly due to good quarterly business performance and salary increases. 2) Management expenses were $280 million in 2023, an increase of 51.4% over the previous year, mainly due to the business and management expenses of the merger of McGow Securities and an increase in share payments. 3) R&D expenses were 150 million yuan in 2023, an increase of 16.6% over the previous year, mainly due to the expansion of R&D personnel and salary increases.
Looking ahead to 2024, it is expected that the company will officially launch a two-pronged development model of financial information services plus securities & funds. Currently, the company's application materials for issuing shares to specific targets are still being reviewed by the Shenzhen Stock Exchange, and all work is progressing normally. It is expected that the capital supplement to McGow Securities will strengthen the development of the company's various lines of business, including brokerage business.
Based on the company's 2023 annual report and the positive outlook for the subsequent McGow Securities exhibition, we expect that the company's revenue for 2024-2026 will be 15.4/21.1/2.58 billion yuan, up 37.9%/37.7%/22.2% year on year; net profit to mother will be 3.7/7.7/1.05 billion yuan, up 411.5%/108.3%/35.0% year on year, corresponding to 51.3/24.6/18.2 times PE, respectively, to maintain the “buy” rating.
The progress of the restructuring of McGow Securities fell short of expectations; fixed capital raising fell short of expectations; and there was a risk that approval of the Investment Pioneer Fund would not pass.