Core view: The company successfully completed the opening and closing ceremonies of the 19th Asian Games and the 4th Asian Paralympic Games in 23 years. Such major national projects enhance the company's popularity and competitiveness. The current stock price already reflects 23 years of performance. In the future, it is recommended to continue to monitor the progress of the company's C-side project.
Maintain a “buy” rating. The company currently has plenty of orders, but there are still uncertainties about the company's large-scale project cycle and progress. We lowered our previous forecast to estimate the company's net profit of 2.54/26/298 million yuan for 24-26 (previously forecast net profit to mother of 481/524 million yuan for 24/25), corresponding to PE 21.2/20.2/18.0, maintaining a “buy” rating.
There was a high year-on-year increase in performance, impairment affected current performance, and there were plenty of orders in hand. The company achieved revenue of 677 million yuan in '23, an increase of 111.46% year on year, and realized net profit of 134 million yuan to mother, an increase of 813.92% year on year. The annual report accrues various types of impairment losses totaling 64 million yuan, affecting current results. Furthermore, due to uncertainty about the delivery time of large-scale projects, there is a certain deviation between the company's performance expectations and actual values. The company has previously released a 23-year performance report, and the current stock price has fully responded. It is recommended to continue to track the company's quarterly results. According to the annual report, as of the end of 23, the company had orders of 550 million yuan, and won the bid amount of 152 million yuan in January-January '24, laying a good foundation for future performance.
Profit distribution plans are returned to shareholders. The profit distribution plan introduced in '23 is to distribute a cash dividend of 6 yuan (tax included) for every 10 shares, and a capital reserve fund will be used to transfer 4 shares for every 10 shares to all shareholders. As of the disclosure date of the annual report, the plan has been approved by the board of directors.
The year 23 was a harvest year, and cultural tourism projects and virtual performing arts continued to break through. The company successfully completed the production of the opening and closing ceremonies of the 19th Asian Games and the 4th Asian Paralympic Games in 23 years. In terms of cultural tourism projects, the Shanghai 632 project exceeded expectations, achieving annual revenue of 35.4411 million yuan and net profit of 9.9194 million yuan. In terms of virtual performing arts, the company used artificial intelligence technology to create a digital torchbearer for the first time during the Hangzhou Asian Games ignition process.
We believe that the company's future core focus is C-side projects and potentially hot projects. We believe the company has the potential to create a blockbuster project. On the one hand, the company has always attached importance to the application of cutting-edge technology and artificial intelligence, and has used cutting-edge technologies such as holographic projection, composite structure projection, virtual reality, and real-time augmented reality interaction to empower the company's projects. On the other hand, the company successfully completed the production of major projects for the opening and closing ceremonies of the 19th Asian Games and the 4th Asian Paralympic Games, which once again proved the company's ability to design creativity and implement implementation. In addition, the company's C-side projects have been active recently, such as “No Boundaries · Chang'an”, which premiered in October 23, and “Xianghu · Yayun”, which landed in Hangzhou in May '24. We expect that once the company has a hot project in the future, it may have an important catalyst for the company's stock price.
Risk warning: (1) risk of changes in the core management team; (2) project progress falling short of expectations; (3) risk of bad debts.