Introduction to this report:
The company's revenue grew steadily in the first quarter, and net profit growth exceeded expectations. The subscription business continued to grow, licensing business revenue stabilized, and the acceleration of AI commercial implementation is expected to drive the subscription business to exceed expectations.
Key points of investment:
Maintain the “Overweight” rating and maintain the target price of 351.90 yuan. According to fine-tuning the company's financial data and adding profit forecasts, the company's EPS is expected to be 3.72 (-0.07) /4.90 (-0.09) /6.13 yuan in 2024-2026, maintaining a target price of 351.90 yuan, maintaining the “gain” rating.
The company's revenue grew steadily, and the net profit growth exceeded market expectations. The company released its 2024 quarterly report, achieving revenue of 1,225 million yuan, up 16.54% year on year; net profit to mother of 367 million yuan, up 37.31% year on year; net profit after deducting 352 million yuan, up 40.56% year on year. Revenue achieved steady growth, and net profit growth exceeded market expectations.
The subscription business continued to grow, and the licensing business stabilized. The company's personal subscription business revenue increased 24.80% year on year in the first quarter, mainly benefiting from the continuous enrichment of member benefits and increased payment rates; domestic institutional subscription business revenue increased 15.57% year on year, and the growth rate declined slightly mainly because the company had just upgraded the WPS365 new office productivity platform. The institutional subscription business is in a stage of deep transformation, and future growth is expected to accelerate; the licensing business increased 6.31% year on year, mainly benefiting from the recovery of purchase orders from Xinchuang customers. The international and other businesses are expected to recover steadily in the future; international and other businesses are expected to recover steadily in the future due to the shutdown of domestic advertising business in the fourth quarter of 2023 The impact decreased by 18.44% year over year.
Accelerated commercial implementation of AI is expected to drive the company's subscription business to exceed expectations. In 2024, the company will officially enter the AI office launch. On the evening of March 25, the WPSAI personal membership subscription service was officially launched. Compared with the previous WPS Super Conference price, the WPS365 super conference price was increased by 100%; on April 9, the company released a new WPS365 new quality office productivity platform, and the AI functions were fully upgraded. The implementation of AI offices is expected to increase user payment rates and customer unit prices, and promote the development of the company's subscription business beyond expectations.
Risk warning: the risk of AI industrialization falling short of expectations, the risk of increased market competition