The company 2023H1 increases the market development, promotes the project implementation and the acceptance, helps the performance to accelerate the recovery, the business income increases by more than 50% compared with the same period last year, the performance turns from deficit to profit. Driven by Xinchuang, the value of GIS basic software is gradually released. Under the tide of digital economy, BG applications such as water conservancy, meteorology, agriculture, smart airport, smart park and so on are expected to blossom. At the same time, the company promotes the integration of products and innovative technologies, remote sensing GIS integration and AI large models and other areas, the prospect is promising. Maintain the "overweight" rating.

The income of H1 has increased by more than 50%, and its performance has turned from deficit to profit. 2023H1, by actively increasing market development, promoting the progress of project implementation and acceptance, the company achieved accelerated recovery, realized operating income of 691 million yuan, an increase of 54.6% over the same period last year, and realized a net profit of 52.96 million yuan, a loss of 49.62 million yuan in the same period last year, and a non-return net profit of 42.47 million yuan. In the same period last year, the company lost 63.72 million yuan, and the performance turned losses into profits. Gross profit margin is 56.8%, year-on-year + 5.1pcts, sales / management / R & D rates are 14.1%, 19.3%, 16.1%, respectively, year-on-year-2.2/-7.9/-7.8pcts, various rates are significantly optimized, showing good management and control benefits.

The value of Xin Chuang has been gradually released, and the ecology of GIS basic software has been continuously improved. The company's GIS basic software is the core supporting software in the field of Xinchuang, accelerating its expansion in the fields of energy, communications, aerospace, transportation and so on. 2023H1 won the bid of National Pipe Network Group, China Petroleum & Chemical, China Huaneng and other central enterprise users GIS related projects. In the first half of the year, the company's basic software sales contract increased by 40% compared with the same period last year, and the newly signed contract value was 86.15 million yuan, an increase of 54% over the same period last year. In terms of ecology, the company completed the adaptation mutual authentication with China Telecom Corporation Tianyi Cloud for the first time, and at the same time promoted the deep integration of SuperMap GIS products and solutions with domestic mainstream trust cloud platform, operating system, chips and other software and hardware products to build an independent and controllable software and hardware ecology. With the policy-side support and the full release of downstream demand, the company's basic software product revenue is expected to continue to grow rapidly.

Seize the opportunity of digital economy and let a hundred flowers blossom in BG applications. The company deeply grasps the development strategy of digital China and digital economy, accelerates the layout of related business such as digital twinning, data elements and data governance, expands the business of government application industries other than natural resources, and realizes business breakthroughs for enterprise applications. enable the development of informatization in various industries. 1) ToG side: the company continues to develop spatial data governance tools. Big data-related contracts increased by 47% in the first half of the year compared with the same period last year, enabling spatial governance innovation and practice. At the same time, efforts will be made to implement and build projects in water conservancy, meteorology, agriculture and housing construction. 2) ToB side: relying on basic software, spatial intelligence and digital twin technology, the company participated in the construction of intelligent airport projects such as Wuhan Tianhe Airport and Lanzhou Zhongchuan International Airport in the first half of the year, and built smart parks such as Lianyungang Petrochemical Industrial Park and Baotou Aluminum Industrial Park, helping to improve operation efficiency. In terms of Saas services, the company map hui carried out sales layout optimization and strategy adjustment in key areas, with a substantial increase of 164% in contract volume and a renewal rate of more than 90% for major customers.

Product technology integration and innovation, pay attention to remote sensing, AI market potential. 1) Integration of remote sensing GIS: 2023H1, the company officially released SuperMap ImageX Pro (Beta) remote sensing software products, realizing the integration of remote sensing GIS, which helps to break the "separation" of remote sensing and GIS system, open up all aspects of data processing, and improve the efficiency of the transformation of spatial data to spatial intelligence. With the transformation of domestic satellite remote sensing from scientific research experiment to business application, the value of data elements can be better released, providing strong and efficient data support for various industries. 2) AI big model: the SuperMap GIS 2023 product released by the company in June integrates SAM vision model, helps remote sensing full elements, fine-grained segmentation, and integrates the pre-training model represented by Transformer technology; NLP has developed two projects: natural resources knowledge question and answer assistant and hypermap product support question and answer assistant; the company uses spatial intelligence to enable multi-business scenarios, taking advantage of the upsurge in the AIGC field.

Risk factors: product technology iteration is not as expected; market competition is accelerating; project expansion is not as expected; management quality and efficiency are declining; macroeconomic recovery is not as expected; government IT expenditure is not as expected.

Profit forecast, valuation and rating: the company's 2023H1 increases market development, promotes project implementation and acceptance, accelerates performance recovery, business income increases by more than 50% year-on-year, and performance turns from deficit to profit. Driven by Xinchuang, the value of GIS basic software is gradually released. Under the tide of digital economy, BG applications such as water conservancy, meteorology, agriculture, smart airport, smart park and so on are expected to blossom. At the same time, the company promotes the integration of products and innovative technologies, remote sensing GIS integration and AI large models and other areas, the prospect is promising. The revenue forecast of the company from 2023 to 2025 is 2.391 billion yuan, and the net profit of the company is 2.86 million yuan.

With reference to comparable company's Aerospace Vision, China Science Star Map, and Taiji share valuation level (Wind unanimously expects average PE 47x in 2023), and taking into account the company's leading position in GIS, accelerated business expansion in fields other than natural resources, long-term continuous promotion of the industry such as AIGC/ remote sensing GIS integration, etc., the company was given 50 times PE in 2023, corresponding to the target market capitalization of 14.3 billion yuan and target price of 29 yuan, maintaining the "overweight" rating.