Performance performance

On August 23, 2024, the company released its 2024 interim report

[Overall performance]

(1) Revenue for the first half of 2024 was 3.805 billion (+12.93%), net profit attributable to mother - 0.794 billion, net profit not to mother - 0.794 billion.

(2) 24Q2 revenue 2.056 billion (+8.51%), net profit to mother - 0.341 billion, net profit not to mother - 0.342 billion.

[Split by customer group]

Major customers achieved revenue of 2.388 billion yuan (+11.2%)

Mid-sized customers achieved 0.6 billion yuan (+8.3%)

Small and micro enterprise customers achieved 0.456 billion yuan (+20.4%)

The government and other public organizations achieved revenue of 0.284 billion yuan (+13.1%)

[Gross profit margin, cash flow]

2024 H1 gross profit margin 52.55% (up 3.7 pct year on year), 24Q2 gross profit margin 53.99% (up 1.81 pct year on year);

2024H1 net operating cash flow-1.521 billion, 24Q2 net operating cash flow -0.224 billion.

[Fee rate]

In 2024, the H1 sales/management/R&D expense ratio was 30.04%/14.86%/27.95%, the sales expense ratio decreased by 2.0pct year on year, the management expense ratio decreased by 0.2pct year on year, and the R&D cost ratio decreased by 2.1 pcts year on year.

In Q2 2024, the sales/management/R&D expense ratio was 30.77%/13.21%/25.06%, the sales expense ratio decreased by 2.0pct year on year, and the management expense ratio decreased by 1.1 pct year on year, and the R&D expense ratio decreased 2.4 pcts year over year.

Note: The above growth rates are all year-on-year growth

Performance reviews

Cloud revenue continues to rise, subscription transformation trends are emerging, and overseas business is progressing in an orderly manner: 2024H1's cloud revenue has grown steadily. Among them, cloud revenue for enterprise customers reached 2.628 billion yuan, a year-on-year growth rate of 20.90%, and business revenue for government and other public organization customers reached 0.217 billion yuan, a year-on-year growth rate of 25.80%.

Among enterprise customers:

Cloud service revenue for large customers reached 1.76 billion yuan, a year-on-year growth rate of 16.8%. YonBip's revenue for the flagship product increased 42.1% year over year, and the renewal rate was 101.1%.

Cloud service revenue for medium-sized customers reached 0.43 billion yuan, up 39.1% year on year, YonSuite revenue increased 116.1% year on year, and renewal rate was 92.4%.

The cumulative number of small customer cloud service users reached 0.706 million, adding 0.073 million users. The subscription revenue of medium-sized customers achieved a rapid increase of more than 60%, and the cloud subscription revenue of small and micro enterprises increased 35.3% year over year.

The company's subscription related contract debt was 1.95 billion yuan, up 33.8% from the end of the first half of last year, accounting for 68.6% of the total contract debt; the ARR of the company's cloud service business was 2.33 billion yuan, up 13.1% from the end of the first half of last year.

Overseas business is being developed in an orderly manner: The company actively explores overseas markets, establishing new subsidiaries in Indonesia, Vietnam, Japan, Mexico, Germany and the United Arab Emirates to enhance extended business coverage in the Philippines, Cambodia and Myanmar in Southeast Asia, providing an effective guarantee for Chinese enterprises to go overseas and develop overseas markets. The amount of contracts signed by the company's overseas subsidiaries increased 34% year over year during the reporting period.

The gross margin increased month-on-month, and the results of cost control were visible: during the reporting period, the company's gross margin was 52.5%, up 3.6 percentage points year over year. In the second quarter, it was 54.0% in a single quarter, up 3.2 percentage points from month to month. The company's efficient management has begun to bear fruit, forming a better foundation for achieving efficiency goals throughout the year. At the same time, along with the company controlling the size of personnel, optimizing the personnel structure, and controlling costs and expenses, H1 and single Q2 sales/management/R&D expenses rates have declined.

We believe that:

1. With the company's large investment in the early stages and the gradual improvement of technology, the company's subscription transformation results have now been achieved. At the same time, the company actively developed users during the reporting period. A total of 40 first-level central enterprises were signed, and 3 new central enterprises were signed. Large, medium, and large customers have achieved rapid growth in the cloud business, especially among large enterprises, with a large number of contracts, laying a good foundation for year-round revenue.

2. The company actively polishes products while actively promoting new products, BIP 3-R5, continues to upgrade and iterate from the base platform to field applications to continuously improve product competitiveness. The implementation of the configuration migration tool family asset package has been further improved, and assets delivered by customers in the same industry can be replicated, and it is expected that the company's profitability will continue to increase.

Profit forecasting and valuation

Driven by policy support, industry trends, and the company's use of its strengths, we predict that the company will achieve revenue of 10.853/12.312/14.176 billion yuan in 2024-2026, with year-on-year growth rates of 10.79%/13.44%/15.14%, respectively, and corresponding net profit to mother 0.066/0.115/0.138 billion yuan, respectively, with year-on-year growth rates of -/74.14%/19.78%, corresponding EPS 0.02/0.03/0.04 Yuan, corresponding P/S is 2.64/2.32/2.02 times. Maintain a “buy” rating.

Risk warning: macro-environmental risk, risk of policy progress falling short of expectations, risk of technological change falling short of expectations