Company Profile

Neusoft Corporation is a China-based company principally engaged in the software businesses and system integration businesses.

The Company’s products are applied in health and social insurance, intelligent automobile interconnection, intelligent city, enterprise interconnection and other fields.

The Company is also involved in the provision of related services, as well as property advertising businesses. The Company operates its businesses in both domestic and overseas markets. (Source: MarketScreener)

Event

Neusoft Corporation (“Neusoft”/ the company) announced its 2022 annual financial report and its preliminary financial results for 1Q23.

In 2022, the company turned in revenue of CNY 9.466 billion, up 8.37% from a year prior; its net income attributable to shareholders lost CNY 343 million, versus CNY 1.173 billion in the same period of last year.

In 1Q23, the company’s revenue increased by 29.57%YoY to CNY 1.656 billion; its net income attributable to shareholders stood at CNY 5 million, compared with the loss of CNY 30 million in the same period of last year.

Investment Highlights

The rapid growth in revenue in 1Q23 laid the solid foundation for full-year growth.

As NeuSAR no longer consolidates its statements into the company since November of 2021, the revenue growth in 2022 was 14.8% deducting the impacts of statement elimination.

By structures, the growth of intelligent automobile, medical care, intelligent city, enterprise interconnection and other businesses was 5.08%, 28.52%, -5.24%, and 10.36%.

The revenue was CNY 1.656 billion in Q1, 29.57% higher than it was a year ago, as the company actively promoted the delivery of projects and clients’ acceptance check. The amount of newly-signed contracts maintained high growth, laying a solid foundation for full-year growth.

As a time-honored brand, Neusoft has achieved a leap in intelligent automobile and medical care.

Established in 1991, Neusoft is China’s first software company going public, and selected as “Global Top 100 Software Company” for multiple times.

As of 2022-end, the company’s products have been distributed in over 60 countries with more than 220 vehicles, and it has established cooperation with over 50 leading players at home and abroad.

Neusoft continues to expand its business presence in healthcare ecology and has kept a safe lead in electronic medical records and construction of health insurance information platforms.

Meanwhile, the company promotes the combination of its businesses with AI and big data, and will benefit from the implementation of AI + medical care and AI + driving scenarios.

Earnings forecast and investment recommendation

According to its latest financial report, we revised our earnings forecasts and estimated its net income attributable to shareholders at CNY 316 million in 2023, CNY 456 million in 2024, and CNY 549 million in 2025. Remain “Outperform”.

Potential risks

intensified competition; less-than-expected performance