1H23 The company's revenue was under pressure, and net profit decreased year-on-year
According to the company's semi-annual report for 2023, 1H23's revenue was 806 million yuan, a year-on-year decrease of 27.43%; net profit attributed/net profit of non-attributable net profit was -0.48/-54 million yuan, respectively, a year-on-year loss reduction of 26.60%/25.88%, in line with the company's previous performance forecast. The company's performance in the first half of the year was mainly due to the fact that domestic and foreign macroeconomics were still in the stage of gradual recovery, and market demand had not improved significantly. Considering fluctuations on the demand side of the market, we lowered the company's net profit forecast for 2023-2025 to 0.63/1.13/179 million yuan, respectively (previous value: 0.87/1.53/236 million yuan), respectively. Comparable company Wind agreed that the average PE value for 2024 would be 49x. Considering the company's continued breakthroughs in road business and public security and safety tracks, the company was given 60x PE in 24, with a target price of 3.89 yuan (previous value: 4.51 yuan), maintaining the “increase in holdings” rating.
1H23's Internet of Vehicles business revenue increased 14% year over year; looking at the company's strategic resource focus segments, the company's 1H23 IoT connectivity, terminal and application segment revenue was 440 million yuan, down 28.20% year on year. Among them, Internet of Vehicles product revenue was 141 million yuan, up 14.37% year on year, and other business revenue was 299 million yuan, down 38.93% year on year. Our judgment is that the macroeconomic economy is still recovering, which has led to fluctuations in the company's market sentiment; revenue from police terminals and police informatization applications was 71 million yuan, up 19.80% year on year; and revenue from software systems and solutions was 296 million yuan, down 32.70% year on year. By industry, 1H23's revenue from the transportation industry was 356 million yuan, down 11.97% year on year; the public security industry achieved revenue of 314 million yuan, down 26.04% year on year.
The revenue share of the two main tracks mentioned above is over 80%, which shows that the company's strategic resources are more focused.
1H23 Increase in overall gross margin and continue to strengthen cost control
1H23's comprehensive gross margin was 30.14%, +4.40 pct year on year, showing a marked improvement in revenue quality; in terms of expenses, 1H23's sales expense rate/ management expense rate/ R&D expense ratio were 12.79%/8.91%/15.65%, year-on-year, +2.62 pct/+1.58 pct/+1.56 pct. We judge that the increase in the company's expense ratio was mainly due to the decline in 1H23's revenue scale. Judging from the amount of the three expenses of 1H23, they all showed a year-on-year decline. Controlling and focusing resource investment has shown results.
A leading smart city IoT service provider, focusing on the continuous growth of the transportation+public security market, the company is committed to becoming the world's leading smart city IoT product and service provider, focusing on the Internet of Vehicles, smart transportation, and public safety tracks: In terms of the transportation market, the company is expected to benefit from the rapid growth of electronic license plates, vehicle road collaboration products, and vehicle end products. According to the company's 23 annual report, the company's electronic license plate (two-wheeler market) has won 10 million digital license plate orders in many provincial capitals; the public security market is expected to benefit from the national public safety informatization construction trend, and company intelligence Law enforcement case handling platforms rank among the highest in the national market share. They have already received orders from national platforms such as the Ministry of Public Security's Legal Information Management Platform and the General Administration of Customs Anti-Smuggling Platform, which has built a good track record for subsequent business development.
Risk warning: The order volume falls short of expectations, and there is a certain cycle of new customer expansion.