Event summary: On August 14, 2023, the company released its 2023 semi-annual report. The company's operating income for the first half of 2023 was 690.5055 million yuan, an increase of 54.59% over the previous year; net profit from the return mother was 52.9612 million yuan, an increase of 206.73% over the previous year.
Continue to promote the development of Xinchuang's business and jointly build our own controllable ecosystem. 2023H1's basic software sales contract increased 40% year on year, and the rapid development of basic software is of great significance to the company's overall development; the amount of new Xinchuang contracts signed was 86.15 million yuan, an increase of 54% over the previous year. In addition, the company has increased its expansion in the fields of energy, communications, aerospace, transportation, etc., and has won bids for GIS-related projects from users such as China Pipeline Network Group, Sinopec, China Huaneng, China Aerospace's holding subsidiary, China Railway Construction, China Railway Academy of Sciences, China Power Construction Group, and China Railway Research and Design Institute Group Co., Ltd.
At the same time, the company has in-depth cooperation with Huawei: the basic GIS software fully supports technologies such as OpenGauss, Euler, Hongmeng, Yeteng, and AI, and jointly released YuGong's open source spatial database database with Huawei, providing spatial data storage, calculation and management capabilities, and empowering existing relational database technology.
Promote and deepen technology integration and enhance AI to further empower development. The Future GIS Laboratory of the Supermap Research Institute has already gained insight into the future of generative AI (AIGC) and large models in mid-2022, and has laid out research ahead of schedule. Currently, relevant research covers almost all hot directions of AIGC and big models: 1) For large CV models, the product SuperMap 2023 GIS released in June this year has integrated large SAM visual models to help remote sensing with all elements, fine-grained segmentation, and collaborative upstream target detection models, making up for the shortcomings of SAM's lack of semantics. 2) Aiming at the big NLP model, Chaotu Research Institute's future GIS lab will introduce it into vertical fields of the industry to provide privatized deployment solutions. 3) Aiming at the multi-modal model, the company started with AI painting, laid out the AIGC field, and developed an integrated application project adapted to planning services to empower businesses such as comparison maps and planning concept maps before and after rural renovation. 4) The SuperMap GIS 2023 released by the company closely follows the cutting edge of AI, integrates pre-training models represented by Transformer technology, and provides a variety of pre-training models for remote sensing image interpretation. 5) Close attention and active deployment evaluations have also been carried out in AIGC and other directions of large models, such as AI rendering (NeRF), AI generation of 3D scenes, and other lightweight CV large model solutions.
Seize the development opportunities of digital twins and develop together in government and enterprise application fields. 1) The field of government:
In terms of water resources, the company won the bid for the Digital Twin Three Gorges Simulation Engine Project, the Three Gorges Group's Chongqing Wushan County Smart Water GIS Support Software Platform Procurement Project; the subsidiary Nanjing Guotu won the bid for the Pearl River Delta Water Resources Allocation Project for the Water Condition and Water Quality Monitoring System Project. In terms of meteorology, the company participated in the National Science and Technology Innovation 2030 “Next-Generation Artificial Intelligence” major project “Agricultural Catastrophe Risk Comprehensive Integrated Intelligent Analysis and Decision Research”
Project research and development of a high-performance, highly usable, and highly reliable agricultural disaster risk analysis and intelligent decision making service platform. In terms of big data, 2023H1's big data-related contracts increased by about 47% year-on-year, and participated in big data projects in many places.
2) Business sector: In terms of smart airports, the company participated in the construction of smart airport projects such as Wuhan Tianhe Airport, Lanzhou Zhongchuan International Airport, and Shenzhen Airport. In terms of smart parks, the company participated in the Lianyungang Petrochemical Industrial Park project and the Baotou Aluminum Industrial Park smart park project. In terms of MapHui, 2023H1 achieved a major breakthrough in contract value, an increase of about 164% over the previous year; the renewal rate for major customers reached over 90%, and also signed new contracts with many companies such as Nanfu Battery and Mengniu Dairy.
Investment suggestions: The company is the world's leading GIS industry leader. It builds a second growth curve based on fundamentals, expands in the direction of digital twin water conservancy, meteorology, airports, etc., and grasps opportunities such as innovation and real-world 3D China. At the same time, it has plenty of growth momentum; at the same time, it deeply lays out forward-looking opportunities and makes more efforts to open up long-term growth space in the fields of AI and data elements. The company's net profit for 2023-2025 is estimated to be 27/389/518 million yuan, corresponding PE to 39X, 27X, and 20X respectively, maintaining the “recommended” rating.
Risk warning: new technology falls short of expectations; industry demand releases fluctuations in pace; industry competition intensifies.