Foxit Software(SH:688095) Guotou Securities·2024-08-31 05:30Investment Rating - The investment rating for the company is "Buy-A" with a target price of 55.36 CNY, maintaining the rating [1][7]. Core Views - The company has shown a significant improvement in its subscription model, with a revenue increase of 17.99% year-on-year in the first half of 2024, reaching 338 million CNY [2][3]. - The company has turned a profit with a net profit of 62.52 million CNY, primarily due to investment gains from the merger with Foxit Kunpeng [2]. - The subscription business has grown by 67.83%, contributing 45.81% to total revenue in Q2 2024 [3]. - The company is enhancing its core PDF editing product with AI capabilities, improving user interaction and efficiency [6]. Financial Performance - In Q2 2024, the company achieved a revenue of 169 million CNY, a 19.13% increase year-on-year, and a net profit of 73.13 million CNY [3]. - The annual recurring revenue (ARR) for the subscription business reached 325 million CNY, a 29.9% increase from the end of the previous year [3]. - The gross margin remains high at 94.10%, with sales, management, and R&D expense ratios at 55.46%, 23.07%, and 34.09% respectively [3]. Market Position and Strategy - The company is recognized as a leading domestic PDF enterprise, leveraging a subscription model to enhance customer lifetime value and channel transformation to capture more business opportunities [7]. - The North American market accounts for 55% of revenue, with significant growth in Europe and Asia-Pacific regions [3]. - The company has implemented a stock incentive plan to boost confidence in its subscription business growth [4]. Future Projections - Revenue projections for 2024, 2025, and 2026 are estimated at 724 million CNY, 861 million CNY, and 1,058 million CNY respectively, with net profits expected to be 4.7 million CNY, 28 million CNY, and 87.2 million CNY [9][12]. - The company anticipates a dynamic price-to-sales ratio of 7 times for 2024 [7].