Jinwu Financial News | According to GF Securities Research, the revenue of Lianyirong Technology (09959) was -6.1% year-on-year to $868 million, mainly due to changes in customer and product portfolio changes, as well as adjustments in pricing strategies. Gross margin in '23 was -23.1 pct to 60.7% year over year. The decline in revenue and gross margin and the expansion of impairment losses led to operating losses of 341 million yuan in 23, with an operating loss ratio of 39.2%; net loss to mother of 441 million yuan, adjusted net loss to mother of 288 million yuan.
The bank expects a steady increase in transaction volume from 24 to 26. The commission ratio is expected to decline as multi-level transfer clouds and e-chain clouds grow. The gross margin is expected to gradually rise to 66% to 68%, and the fee rate will decline. Total revenue for 24-26 is estimated to be $1,05/11.16/1,273 billion yuan, respectively, and adjusted net profit to mother is -0.25/0.70/140 million yuan, respectively. The company is a leading domestic supply chain fintech SaaS company. It continues to penetrate multi-industry customer groups, optimize customer structures and business structures, and gradually digest short-term adverse effects. There is still room for growth in the future. Refer to comparable company valuations, and a PS value of 4 times over 24 years is given, corresponding to a reasonable value of HK$1.91 per share. Maintain a “buy” rating.