CASHWAY(603106) Zhong Guo Jing Ying Bao·2025-05-02 19:12Core Viewpoint - Hengyin Technology (603106.SH) has reported a significant turnaround in its financial performance for 2024, achieving a net profit of 40.12 million yuan after a prolonged period of losses, primarily driven by non-recurring gains and a strategic shift towards AI integration in its operations [1][2][4]. Financial Performance - The company achieved an operating revenue of 437 million yuan in 2024, marking a year-on-year increase of 2.53% [2]. - The net profit attributable to the parent company was 40.12 million yuan, a substantial improvement from a loss of 208 million yuan in the previous year, representing a turnaround of 248 million yuan [2]. - The fourth quarter of 2024 was particularly strong, with total revenue reaching 180 million yuan, a year-on-year increase of 43.89% and a quarter-on-quarter increase of 132.46% [3]. Government Subsidies and Non-Recurring Gains - A significant portion of the profit in 2024 was attributed to government subsidies amounting to 26.57 million yuan and changes in the fair value of purchased stocks totaling 6.96 million yuan, which together accounted for 83.56% of the profit [4]. - The company has faced ongoing losses in previous years, with net profits being negative for 11 consecutive quarters prior to 2024 [2][4]. Business Transition and Market Trends - Hengyin Technology is transitioning from traditional cash equipment manufacturing to a more diversified business model, responding to declining demand for ATMs and bank branches [6][7]. - The number of ATMs in China has decreased from a peak of 1.11 million in 2018 to 802,700 by the end of 2024, reflecting a broader trend of shrinking bank branches [6]. R&D and Innovation Challenges - Despite the shift towards an "AI+" strategy, the company's R&D expenditures have decreased significantly, from 101.31 million yuan in 2020 to 48.5 million yuan in 2024, a reduction of approximately 51.98% [9][10]. - The number of patents and software copyrights has also declined, indicating potential challenges in maintaining competitive technological capabilities [10]. Industry Insights - The financial technology sector is urged to adapt to the digital transformation of bank branches, focusing on enhancing user interaction, creating ecosystem applications, and improving transaction security [11]. - Key areas for development include multi-modal technologies such as facial and voice recognition, as well as the integration of AI with financial terminal services [11].