Incidents:
Yuxin Technology released its 2023 annual report. In 2023, the company achieved revenue of 5.204 billion yuan, up 21.45% year on year; net profit to mother of 326 million yuan, up 28.76% year on year; net profit after deducting non-return to mother was 316 million yuan, up 29.34% year on year; and gross sales margin was 25.94%, down 1.07 pct year on year.
Looking at a single quarter, the company achieved revenue of 2.49 billion yuan in the fourth quarter, up 30.61% year on year; net profit to mother was 166 million yuan, up 18.36% year on year; net profit after deducting non-return to mother was 154 million yuan, up 16.37% year on year; and gross sales margin was 23.45%, down 1.27pct year on year.
Xinchuang helps the system integration business increase revenue
The company has set the development of financial credit innovation as an important strategic development goal. In 2023, the system integration business increased 77.47% year-on-year, with revenue reaching 1,720 billion yuan, accounting for 33.05% of total revenue, and increasing gross margin by 1.41 pct to 10.48%. The software development and service business remained stable. Revenue reached 3.322 billion yuan, up 5.54% year on year, accounting for 63.84% of total revenue. Gross margin increased 1.71 pcts year over year to 31.13%, and major state-owned banks and joint stock banks contributed 51.04% of software revenue. Revenue from innovative operations was 157 million yuan, a year-on-year decrease of 4.53%. The decline in comprehensive gross margin was mainly due to changes in the share of revenue.
Launching the first batch of financial industry model application products and solutions, the company independently developed and launched the first batch of financial industry large-scale model application products and solutions, including 4 application-level products and 1 development platform, namely: development assistant CodePal, financial data security classification assistant DataSherpa, AI+ credit assistant (customer due diligence), AI+ marketing assistant, and big model application development platform. The company will continue to launch AI+ products based on more scenarios, integrating software and hardware products.
Expand the non-performing asset market for personal loans and promote the development of overseas markets
The company signed a strategic cooperation agreement with Xiamen Asset Management to provide comprehensive business solutions for the development of the personal loan non-performing asset market, further open up the company's development space, and form effective collaboration with existing business. In terms of overseas business, progress is progressing steadily in 2023, with existing projects completed online acceptance, and phase II and phase III orders signed; in 2024, we will continue to develop overseas markets, mainly the Southeast Asian market, strengthen close collaboration with long-term partners, and increase customer stickiness and service model expansion.
Profit Forecasts, Valuations, and Ratings
Taking into account the changes in revenue composition, we expect the company's revenue for 2024-2026 to be 61.49/71.09/8.095 billion yuan, with year-on-year growth rates of 18.17%/15.61%/13.87% respectively, net profit to mother of 4.01/4.99/ 615 million yuan, year-on-year growth rates of 23.21%/24.26%/23.41%, EPS 0.57/0.71/0.87 yuan/share, respectively, and a 3-year CAGR of 23.63%. Since the company is one of the leaders in the largest domestic fintech solutions market, it will focus on the three areas of software, innovative operation, and overseas business. Referring to comparable company valuations, the company will be given a 2024 PE valuation 30 times, with a target price of 17.10 yuan to maintain a “buy” rating.
Risk warning: Market competition increases risk, order execution falls short of expectations, products and technology fall short of expectations, regulatory risks, overseas market risks, etc.