CICC: Maintains "outperform" rating for YEAHKA (09923) and lowers target price to HK$9.5.

CICC released a research report stating that YEAHKA (09923) 's performance in the 24th year basically meets market expectations, with revenue down 22% year-on-year to 3.1 billion RMB, EBITDA down 31% year-on-year to 380 million RMB, and net profit up 6.1x year-on-year to 82.45 million RMB. The company is currently trading at 8x/5x 25e/26e EV/EBITDA; the target price was lowered by 39% to 9.5 HKD, corresponding to 9x/6x 25e/26e EV/EBITDA and an 18% upside potential; considering the company's relative advantages in the payment sector and improving profitability, the outperform industry rating was maintained. Considering the impact of the macroeconomic environment on Gross Payment Volume (GPV), the 25e adjusted EBITDA was lowered by 49% to 380 million RMB, and the 26e adjusted EBITDA was introduced at 430 million RMB. Key points from CICC: Acquiring transaction volume has decreased due to macroeconomic impact, with high growth in overseas volume, and improvement in one-stop payment service gross margin. The company's 24th year acquiring transaction volume GPV was down 19% year-on-year to 2.34 trillion RMB, mainly affected by macroeconomic fluctuations and a decrease in average transaction amount per customer; the overseas business payment transaction volume GPV exceeded 11 billion RMB, nearly 5 times year-on-year growth, benefiting from the company's continued exploration of globalization strategy. The company's overall acquiring business rate slightly decreased by 0.6bps year-on-year to 11.5bps (excluding the impact of non-recurring income adjustments decreased to 11.9bps), driving the company's overall acquiring business revenue down 23% year-on-year to 2.7 billion RMB. Since 2H24, the company's domestic payment business has no longer been affected by non-recurring income adjustments; benefiting from the company's strong bargaining power and reduced commission fees to distribution channels, the company's 24th year gross profit increased by 13% year-on-year to 380 million RMB, with a gross margin increase of 4.5ppt year-on-year to 14.2%. Enhanced commercialization capabilities of value-added services, increase in revenue contribution, and relatively stable gross margin. The company's value-added services include merchant solutions and in-store e-commerce services, with a total revenue contribution of 1.2ppt to 13% year-on-year in the 24th year, including: 1) Although the average amount of domestic consumption decreased, the revenue of merchant solutions in the 24th year decreased 6% year-on-year to 340 million RMB, with the precision marketing business achieving a record high in business transactions in 24th year, partially offsetting the impact of a decrease in user base in 2H24; the gross margin remained basically flat at 87.2%, benefiting from the company's high product profitability and cost control, and focus on more profitable customer groups. 2) The in-store e-commerce service underwent a strategic upgrade, focusing on high-quality and more profitable customers, reducing direct sales investment and developing distribution networks, with revenue down 40% year-on-year to 61.2 million RMB in the 24th year, primarily due to the gradual elimination of lower-profit customers, focusing on increasing services to large customers, doubling merchant average revenue and profit, with upfront income contributing about 50% to in-store e-commerce revenue; benefiting from refined operations after strategic upgrade, the gross margin increased slightly year-on-year by 1ppt to 81.3%. AI empowers operation efficiency, effective financial management improves profitability. The company's AI Lab has been deploying and applying large models such as DeepSeek since 23, accelerating the landing application of AI in business scenarios, empowering various stages of the business process; In the 24th year, by increasing the usage rate of AI tools, the company reduced related operating expenses by 20%, with sales, management, and research and development expenses all down around 11% year-on-year. In addition, benefiting from simplified debt structure and cost control of financing, the company's financial costs in the 24th year decreased by over 30% year-on-year, combined with improved operational efficiency, driving net profit up 6.1x to 82.45 million RMB year-on-year. Risk warnings: increasing industry competition, macroeconomic uncertainty, and regulatory tightening risks.