Event: The company released its 2023 performance forecast. It is expected to achieve net profit of 100 million yuan to 130 million yuan, YoY +39.69% ~ +81.60%; achieve net profit after deduction of 80 million yuan to 110 million yuan, YoY +4.60% ~ +43.82%; and achieve basic earnings per share of 0.0993 yuan/share to 0.1290 yuan/share.
Comment: Q4 revenue increased by nearly 85% month-on-month, and profit from fee control and efficiency increased. In 2023, the company achieved a high increase in net profit due to deduction of net profit to mother rather than later. The main reason was the optimization of operating efficiency and significant cost pressure reduction effects. The company's revenue from IoT consulting and design services, IoT technology services, and education increased significantly in the fourth quarter of '23. The revenue for the 23Q4 single quarter increased nearly 85% month-on-month, and the estimated revenue for the single quarter exceeded 210 million yuan. On the cost side, the synergy effect of the company's industry-education integration strategy was highlighted. Operating efficiency was continuously optimized, and the total cost for the full year of 23 fell by a large percentage when R&D expenses continued to increase month-on-month in 23Q4. In the first three quarters of 2023, the company generated sales expenses/ management expenses/ R&D expenses of 840.04/5970.67/ 22.3616 million yuan respectively, a year-on-year decrease of 54.53%/50.97%/2.25%, respectively. The deep integration model of production, academia and research brought synergy effects to help improve the company's profitability and achieve rapid profit side growth.
The future of the online business is promising, and the pension scenario is expected to open up a new growth curve. Physical networking realizes functions such as accurate health management and disease risk prevention through the collection and analysis of human characteristics and behavioral data. The elderly population in our country is huge, the supply of old-age services is insufficient, and the market demand is most urgent.
According to forward-looking data, the market size of China's pension industry in 2022 is about 9.4 trillion yuan. The company's “Guomai University Elderly Care” large-scale smart pension community project uses networking, artificial intelligence and other technologies to provide a full range of multi-level accurate health management services for the elderly. Infrastructure construction has been completed, and future plans are further extended to third-party pension institutions and home environments. We are collaborating with various parties to actively explore progress and application scenarios for the key research direction of brain-computer interface. The implementation of the online pension scenario is expected to open up a new growth curve for the company.
The integration of industry and education consolidates long-term competitiveness, and cooperation with Huawei ICT Academy empowers Hongmeng's construction. The company adheres to the concept of integrating industry and education, and the wholly-owned Fuzhou Institute of Technology has become a talent training base for the company's 5G and Internet of Things business, an incubation platform for innovative projects. The company has cooperated with Huawei to build an ICT academy, with mobile device Hongmeng development as the core. On January 18, the Hongmeng Galaxy Edition opens applications for developers. The company's education business is expected to benefit deeply and maintain a continuous growth trend.
Profit forecast and investment advice: Guomai Technology is a leading IoT technology service provider in China. It is optimistic about the company's industry-education integration development concept to achieve continuous growth in performance. The company is expected to achieve revenue of 527/6.01/682 million yuan in 2023-2025, and net profit of 1.14/1.35/156 million yuan, corresponding to EPS of 0.11/0.13/0.16 yuan. This is the first coverage, giving it a “buy” rating.
Risk warning: technical risk, new business development falling short of expectations, securities investment risk.