Performance review
The first half of 2023 results are in line with our expectations
The company announced its results for the first half of 2023: operating income 690 million yuan, year-on-year + 54.6%; return to the mother net profit of 52.96 million yuan, year-on-year return to profit (loss of 49.62 million yuan in the same period last year), deduction of non-return net profit of 42.47 million yuan (loss of 63.72 million yuan in the same period last year), in line with our expectations. In a single quarter, 2Q23's operating income reached 400 million yuan, + 133.5% compared with the same period last year, with a net profit of 40.77 million yuan, a loss of 61.32 million yuan in the same period last year, a year-on-year profit recovery of 61.32 million yuan, and a non-return net profit of 35.86 million yuan, compared with a loss of 70.67 million yuan in the same period last year.
Trend of development
1H23 achieved a high year-on-year increase in revenue, which we believe on the one hand is due to the postponement of some 2022 orders to this year; on the other hand, the increased demand for domestic alternatives and the good expansion of B-and G-end industries promote revenue growth. 1) basic software sales contracts increased by 40% compared with the same period last year, of which the newly signed domestic replacement contracts totaled 86.15 million yuan, an increase of 54% over the same period last year. 2) in terms of growth business, the company continues to promote the expansion of its products into multi-industry areas: to G, the company's bid-winning digital twin three Gorges simulation engine project, and the landing of orders in residential construction, meteorology, agriculture and other fields; in the field of to B, the company actively promoted the development of applications such as smart airports and smart parks, and the contract value of map hui business increased by about 164% compared with the same period last year.
The decline in expense rate contributed to high profit growth and good payback control. 1H23 operating cash flow improved compared with the same period last year.
1) 1H23, the gross profit margin of the company's GIS software is from + 5.2ppt to 57% compared with the same period last year, mainly due to the lower gross margin affected by the epidemic in the same period last year, 1H23 accelerated acceptance and better payback. We believe that the gross profit margin of the product is expected to remain stable for the whole year. 2) the rate of sales / management / R & D expenses is 14.1% 19.3pm / 16.1%, respectively, compared with the same period last year-2.2/-7.9/-7.8ppt, mainly due to the rapid growth of 1H23 revenue and the high level of 1H22 expense rate affected by the epidemic. 3) the net operating cash flow is-410 million yuan, the company strengthened the control of payback in the first half of the year, and the net outflow narrowed year-on-year (1H22 is-560 million yuan). We are optimistic that the company will continue to reasonably control expenses for the whole year of 23 years, and its profits for the whole year will continue to achieve good growth.
The new product release of remote sensing GIS has actively promoted the research and development of AI technology, and the contract value of big data has increased rapidly.
1) the company released the cross-platform remote sensing image processing desktop software in the first half of the year, which opened up the upstream link of GIS software and improved the timeliness of remote sensing image application. We believe that this product has a wide range of applications in land, surveying and mapping and other fields. 2) in the aspect of AI large model, the company actively promotes the combination of SAM, NLP large model and its own GIS products. SuperMap GIS 2023 has been able to provide a pre-training model for remote sensing image interpretation. 3) 1H23, the company has participated in the big data project in Shanghai, Hangzhou and other places. The value of big data-related contracts has increased by about 47% over the same period last year. We are optimistic that the company will actively promote the research and development of AI technology, develop the application of data elements related to GIS data, and enable more vertical fields.
Profit forecast and valuation
Keep the 2023 and 24 profit forecasts unchanged. The current share price corresponds to a price-to-earnings ratio of 39.1 times 2024 / 28.7 times earnings for 2023 Universe. Maintain an outperform industry rating and a list price of 26.00 yuan, corresponding to 43.1 times 2023 price-to-earnings ratio and 31.6 times 2024 price-to-earnings ratio, which has 10.1% upward space compared with the current stock price.
Risk
The new business development is not as expected, and there is uncertainty in the research and development of AI technology.