Incident: The company released its 2022 annual report and 2023 quarterly report. It achieved operating income of 76.567 billion yuan in 2022, +16.4% year on year; achieved net profit of 203 million yuan, +14.1% year on year; and achieved net profit of 170 million yuan after deducting non-return to the mother, +14.1% year on year. 23Q1 achieved revenue of 17.510 billion yuan, +12.72% year on year; net profit of Gimu was 55 million yuan, +41.01% year on year; after deducting net profit of non-Gimu mother was 37 million yuan, +0.65% year on year.
Industrial data services are steadily improving, and AI technology is the future investment direction. The company implements the “One Hundred Chains” strategy to continuously improve its industrial data service capabilities. In 2022, the company's industrial data service sector achieved revenue of 691 million yuan, an increase of 13.51% over the previous year. Among them, data subscription revenue reached 419 million yuan, an increase of 21.97% over the previous year, accounting for more than 60% of industrial data service revenue. Subscription-based services were recognized by the market, and the number of paying users reached 276,000. The company actively combines AI technology with data services, and uses knowledge mapping, NLP, deep learning and other technologies to provide users with search and recommendation capabilities. At the same time, the company is also experimenting to develop an industry vertical model based on an open source big language model to automatically generate information content through AIGC technology to improve the company's content productivity. The company will continue to increase investment in R&D and make full use of AI to empower its own business.
The steel trading business is developing steadily around the “consignment sale+supply chain” integration. In 2022, the company's steel trading business achieved revenue of 75.872 billion yuan, an increase of 16.44% over the previous year; the net profit returned to the mother was 273 million yuan, a decrease of 15.77% over the previous year; the settlement volume of the steel and silver platform increased steadily, reaching 52.9715 million tons in 2022, an increase of 14.80% over the previous year. The company continues to consolidate the service capabilities of the Steel and Silver e-commerce platform, focusing on the core business model of “consignment sale+supply chain” to provide smart ecological services for the entire steel industry chain. The company focuses on the pain points of the digital transformation of steel companies and provides customized services through Steel Silver Cloud SaaS products. In the future, the company will continue to integrate industrial chain resources and promote the growth and innovation of steel trading business through process optimization and reengineering.
The 23Q1 performance ushered in rapid growth, and the subsidiary Longzhong Information turned a loss into a profit. The company's net profit returned to its parent grew rapidly in the first quarter of 2023. The main reason was that the government subsidies received by the company increased significantly compared to the same period last year. The company's industrial data service business achieved revenue of 189 million yuan, an increase of 24.87% over the previous year. Shandong Longzhong Information Technology Co., Ltd., an important subsidiary, achieved revenue of 39 million yuan, an increase of 65.71% over the previous year, and turned a loss into a profit. We believe that the company, as one of several merchants on the Shanghai Data Exchange, is an important data resource holder and is expected to continue to benefit from the market-based development of data elements.
According to the revised annual report for '22, the company's operating income, gross margin and expense forecasts were adjusted to $0.91 and $1.22 (previous values were $0.94 and $1.12), and the earnings per share forecast for the new 25 years was $1.60. Referring to the price-earnings ratio of comparable companies in 23 years, the corresponding target price was 46.41 yuan, maintaining the shareholding increase rating.
Risk warning
Policy implementation falls short of expectations; increased risk of market competition; risk of fluctuations in the steel industry; risk of credit management