Description of the event

On October 29, the company released its report for the third quarter of 2023. According to the announcement, the company achieved operating income of 615 million yuan in the first three quarters, a year-on-year decrease of 12.83%, and realized net profit of 143 million yuan, a year-on-year decrease of 32.64%.

Some businesses are affected by various factors, and performance has fluctuated

In the first three quarters of 2023, the company's operating income declined compared to the same period last year. The specific factors driving changes in the main business revenue are as follows:

(1) In the first three quarters of 2023, the company's integrated circuit product sales continued to grow steadily, but due to the impact of design service project acceptance points, the company's integrated circuit business revenue fell 4.60% compared to the same period last year.

(2) In the first three quarters of 2023, the company's Beidou second-generation terminal products were gradually being replaced with Beidou third-generation terminal products. Although the orders for Beidou third-generation terminals and modules signed by the company increased significantly compared to the same period last year, due to factors such as testing and acceptance of Beidou terminal products, product delivery was delayed, and the company's Beidou navigation integrated application business revenue fell 30.84% compared to the same period last year.

(3) In the first three quarters of 2023, the company continued to develop and mass-produce visual intelligent products around the direction of intelligent application of unmanned platforms, focusing on the airborne ancillary equipment market. Visual intelligent products have increased significantly in terms of sales area and number of customers. Currently, it has undertaken the development of system-level and equipment-level products in many unmanned platform projects. However, due to the progress of construction and acceptance of video surveillance system projects, the company's smart city construction and operation service business revenue fell 8.46% compared to the same period last year.

Investment advice

According to the company's financial report, we adjusted our profit forecast. The company's net profit for 2023-2025 is estimated to be 257 million yuan, 3.75 million yuan, and 495 million yuan respectively (the value before 2023/2024 was 376 million yuan/565 million yuan), with year-on-year growth rates of -14.4%, 45.9%, and 32.1%. Corresponding PE is 45.39, 31.11, and 23.55 times, respectively. Maintain a “buy” rating.

Risk warning

Downstream demand falls short of expectations, R&D falls short of expectations, and production capacity release falls short of expectations.