On October 30, 2023, Zhenxin Technology released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved total operating income of 615 million yuan, a year-on-year decrease of 12.83%, and net profit of 143 million yuan, a year-on-year decrease of 32.64%. In the third quarter of 2023, the company achieved total operating income of 180 million yuan, a year-on-year decrease of 12.50%, a year-on-year decrease of 25.97%, and net profit of 34 million yuan, a year-on-year decrease of 32.58%, and a year-on-month decrease of 42.05%.
The company's main revenue comes from the three major fields of integrated circuits, Beidou terminals, and operation and security monitoring. In terms of revenue by business, (1) the company's integrated circuit product sales continued to grow, but due to the impact of design service project acceptance points, the company achieved operating income of 347.9602 million yuan from January to September 2023, a decrease of 4.60% over the previous year. (2) In terms of Beidou terminals and operations, the company's products are gradually changing from Beidou II to Beidou III terminal products. Orders for third-generation terminals and modules have increased significantly, but due to factors such as product testing and acceptance, product delivery has been delayed. From January to September 2023, the integrated application business of Beidou navigation achieved revenue of 13,96253 million yuan, a year-on-year decrease of 30.84%. (3) In terms of security monitoring, the company continues to develop and mass-produce visual intelligent products around the direction of intelligent application of unmanned platforms, focusing on the airborne ancillary equipment market. However, due to the progress of video surveillance system project construction and acceptance, the company's smart city construction and operation service business achieved revenue of 126.72556 million yuan, down 8.46% from the same period last year.
China's remote sensing satellites have reached the world's advanced level, and the company is deeply involved in the Beidou satellite industry. On November 10, 2023, information released by the 1st China Surveying, Mapping and Geographic Information Conference showed that in 2022, China added 3.3 times more commercial remote sensing satellites than in 2021 and 6.4 times that of 2020. Commercial remote sensing satellites are developing rapidly, and the quantity and quality of China's remote sensing satellites have reached the world's advanced level. The company's integrated circuit business is deeply involved in the field of digital analog chip design. It closely follows international advanced technology in the direction of the three generation of Beidou products and provides technical support for the next generation of products.
The chairman and directors plan to increase their holdings in the company, demonstrating senior management's confidence in the company's development. On August 23, 2023, Mr. Xie Jun, the chairman of the company, and Mr. Mo Ran, the director of the company, announced a total increase in the company's stock holdings of 10-20 million yuan based on confidence in the company's continued stable development and long-term investment value in the future.
[Investment advice]
The company's business development has remained steady. Due to delays in delivery due to product testing and acceptance, the company's revenue has fluctuated to a certain extent in the short term. However, the company's industries are all in a stage of rapid development, and they are also key national strategic layout industries. We are optimistic about the company's future performance. Therefore, we expect the company's revenue in 2023/2024/2025 to be 1,021/14.03/1,828 billion yuan, net profit of 227/3.56/492 million yuan respectively, corresponding EPS of 0.40/0.63/0.87 yuan, and corresponding PE of 63/40/29 times, respectively, giving a “increase in holdings” rating.
[Risk Reminder]
Many lawsuits are still pending due to differences between the controlling shareholders. The governance impasse caused by the controlling shareholder will still exist for a long period of time. Currently, it has not affected the company's standardized operation, but there is a risk that it will affect the uncertainty of the company's major future management decisions;
the risk that the company's products will fail the inspection;
There is a risk that the recovery in downstream market sentiment will be slower than expected.