Company Profile

Beijing Compass Technology Development Co., Ltd. is a China-based company that provides financial data analysis and securities investment consulting services to investors by using securities-based software terminals as a carrier and the Internet as a tool.

The Company is also engaged in advertising services and insurance brokerage. The Company's main products are the wealth of the DPFMRAII system, full-win game private version, full-win game pioneer version, full-win game version and full-win game intelligent trading system.(Source:MarketScreener)

Event

Beijing Compass Technology Development Co., Ltd. (“Compass”/ the company) turned in revenue of CNY 511 million in the first half of 2023, down 43.69% YoY; it reported net income attributable to shareholders at CNY 18 million, 94.34% lower than it was a year ago; it recorded net income deducting non-recurring items at CNY 12 million, a 96.32% decline from a year prior.

Investment Highlights

Its financial information business was under pressure while its securities business stepped on track.

In Q2, Compass made revenue of CNY 173 million, down 39.30% from a year ago.

By businesses, its financial information services business in H1 made CNY 442 million, down 49.74% from a year ago, mainly due to its marketing adjustments, as it did not market full-win intelligent decision-making products (alpha version), and to the laggard effects of performance from such business.

MYGUIDE Securities earned CNY 76 million, a surge of 312.66% from a year ago, indicating a turnaround after restructuring, with its brokerage business at CNY 35 million, up 144.08% YoY, net income from interests at CNY 13 million, up 252.49%, and self-operated business at CNY 27 million, compared with CNY 0 in the same period of last year.

With elevated expense rates, its net income was dragged by multiple unfavorable factors.

In Q2, its net income attributable to shareholders registered a loss of CNY 39 million, compared with CNY 58 million at the same period of last year; its net income deducting non-recurring items recorded a loss of CNY 45 million, compared with CNY 56 million in the same period of last year.

In H1, its selling/ administrative/ R&D expense rate was 49.87%/27.69%/12.24%, up 13.80 percentage points (pps)/21.58pps/3.73pps from a year earlier. The expense　rates totaled at 89.81%, up 39.12pps from a year ago.

In the first half of 2023, the company collected cash from selling goods and providing services of CNY 512 million, down 54.31% from a year ago; it reported its net operating cash flow at CNY 1.017 billion, an 81.80% growth from a year ago.

With unprecedentedly favorable policies, Compass, the new leader of internet securities companies, will fully benefit from it.

On August 27, the transaction taxes revised down by 50%, the minimum acceptable level of earnest money for financing reduced to 80% from 100%, the IPO is temporarily tightened, and the underweight is further standardized. The above policies aim to activate capital markets.

The company’s securities-related business significantly benefited from favorable policies, with CNY 3 billion private placement on the way, and after which, its brokerage and securities margin trading businesses are expected to grow in an accelerated manner.

As a new leading player of internet securities company, the company is expected to　see performance take off thanks to dual drives.

Earnings forecast and investment recommendation

We remain earnings forecasts and estimated its net income attributable to shareholders at CNY 327 million in 2023, CNY 598 million in 2024, and CNY 827 million in 2025, down 3.4%, up 83.1% and up 38.2% from a year ago. Maintain “Outperform”.

Potential risks

fluctuations of capital markets; slower-than-expected business recovery