ZDDC(SH:600633) Huachuang Securities·2024-03-30 16:00Investment Rating - The report maintains a "Recommended" rating for the company, with a target price of 14.7 CNY, corresponding to a market capitalization of 186 billion CNY based on a 25x PE for 2024 [2][3]. Core Insights - The company experienced a slight profit pressure in 2023, with a focus on the progress of new digital technology businesses in 2024. The revenue for Q4 2023 was 790 million CNY, down 37% year-over-year (YOY), but up 32% quarter-over-quarter (QOQ). The net loss attributable to shareholders was 29 million CNY, a 122% YOY decline [1][2]. - For the full year 2023, the company reported total revenue of 3.078 billion CNY, a 41% YOY decrease, primarily due to a strategic contraction in its online social business. However, the net profit attributable to shareholders was 663 million CNY, a 35% YOY increase, driven by investment income and fair value changes [1][2]. Summary by Sections Financial Performance - In 2023, the gaming business generated 1.317 billion CNY in revenue, down 24% YOY, while the online social business saw a significant decline of 70% YOY, generating 769 million CNY. Conversely, the technology information service revenue grew by 6% to 641 million CNY, and digital marketing revenue increased by 24% to 337 million CNY, mainly due to the consolidation of a new subsidiary [2]. - The company’s cash flow from operating activities in Q4 was 322 million CNY, indicating a healthy cash flow status [1]. Business Outlook - Looking ahead to 2024, the company anticipates steady progress across multiple business lines, with a particular focus on the commercialization of its media vertical model, which has received regulatory approval. The digital technology segment is expected to benefit from synergies among its various initiatives, including cloud services and AI applications [2]. - The company is also expanding its business directions, including digital marketing and online literature, which are expected to contribute positively to future growth [2]. Financial Projections - The projected net profits for 2024, 2025, and 2026 are estimated at 744 million CNY, 803 million CNY, and 851 million CNY, respectively, reflecting a slight downward adjustment from previous forecasts due to macroeconomic conditions and business progress [2][7].