Revenue and net profit grew steadily, and performance was in line with expectations

The company released its three-quarter report. Total revenue for the first three quarters was 988 million yuan, an increase of 30.94% over the previous year, and Guimu's net profit was 115 million yuan, an increase of 54.9% over the previous year. Overall performance growth was in line with expectations. In the first three quarters, the company grasped the opportunities for cities across the country to accelerate digital transformation and layout, and achieved good operating results: in the field of integrated urban management service platforms, promoted at the top level, accelerated the construction of various provinces and cities; in the field of urban social governance platforms, the market recognition of quality projects continued to increase; in the field of urban operation network management, it steadily implemented new models for project promotion and construction; in the field of urban municipal drainage networks, gradually established ecology to ensure project delivery; the field of urban big data operation services was strengthened to strengthen R&D and build characteristic data collection models.

Gross margin fell slightly year on year, and the management, sales, and R&D expenses ratio declined slightly. The 2021 H1 gross profit margin was 36.63% (same period last year: 37.40%), a slight decrease from the previous year. Sales expenses ratio is 8.14% (same period last year: 8.21%). Management expenses rate 16.36% (same period last year: 20.67%), R&D expenses rate 7.42% (same period last year: 9.39%).

Profit forecasting and valuation

Under the general trend of modernizing social governance systems and governance capabilities, the company is a leader in digital urban management in China. The growth of the digital urban management business is highly certain. Urban social governance has brought new volume of grassroots business. The underground pipeline network business is expected to continue to make positive contributions after restructuring, and the city operation business is expected to help optimize the company's business model.

The company is expected to achieve operating income of 1,721/20.82/ 2,484 million yuan in 2021-2023 and achieve net profit of 184/241/295 million yuan, corresponding to EPS of 0.38/ 0.50/ 0.61 yuan.

Risk warning

1. Downstream demand fell short of expectations; 2. Business expansion fell short of expectations; 3. Industry competition intensified.