23Q4 revenue/net profit ratio -15.4%/+3.33% YoY, maintaining a “buy” rating
The company achieved revenue of 5.353 billion yuan in 2023, -8.32% year on year, net profit of 698 million yuan, lower than our expectations (740 million yuan), mainly due to a slowdown in the growth rate of traditional infrastructure investment. The company focused on improving quality and efficiency and reducing the scale. Among them, Q4 achieved revenue of 2.161 billion yuan, -15.44% year over year, and net profit of 347 million yuan, +3.33% year over year. Considering the company's focus on improving quality and efficiency and slowing down the growth rate, we adjusted the company's net profit to the mother for 2024-2026 to 746/7.94/835 million yuan (the value was 803/889 million yuan 24-25 years ago). Comparable to the 24-year Wind, the average PE value is 10x. Considering the company's exploration and leadership in the field of low-altitude economy, it is expected to benefit from the accelerated development of the industrial chain. The company will be given 10xPE in 24, with a target price of 10.91 yuan (previous value of 10.85 yuan), maintaining a “buy” rating.
Business structure optimization, significant year-on-year improvement in profitability
By business, the company's traditional business achieved revenue of 4.50 billion yuan in 2023, -8.9%, of which planning and research/ survey and design/ comprehensive inspection/EPC and project full-process management achieved revenue of 4.8/31.7/5.2/320 million yuan respectively, +7.7%/-14.7%/+32.3%/-4.7%, accounting for 59.2%/9.0%/9.6%/5.9%, respectively, gross margin of 49.5%/42.2%/30.3%/17.3% year-on-year, +5.5/+1.7/ -2.1/-0.8pct Emerging businesses mainly include digital intelligence and green and low-carbon, achieving revenue of 39/420 million yuan in '23, +17.8%/-22.3% year-on-year, and gross margins of 47.8%/22.3%, respectively, and +7.6/+2.4pct year-on-year, respectively. The optimization of the business structure drove the company's comprehensive gross margin of +2.1pct to 39.0% year on year in 2023, of which Q4 gross profit margin was 42.3% in a single quarter, +1.60pct year on year.
Expense ratios were optimized during the period, and cash flow maintained steady inflows
The cost rate for the 2023 period was 18.4%, -0.54 pct. Among them, sales/management/R&D/finance expenses were 5.00%/8.53%/4.66%/0.17%, respectively, +0.52/-0.60/-0.72/+0.26pct.
The ratio of impairment expenses to revenue was +1.10pct to 5.45% year on year. Under the combined influence, net interest rate of return to mother in '23 was 13.0%, +1.33pct year over year, of which 23Q4 was 16.1%, +2.92 pct year over year. The net operating cash inflow in '23 was 499 million yuan, with a year-on-year increase of 101 million yuan. The payment/payout ratio was 93.5%/61.6%, respectively, +5.56/+6.91 pct.
Develop digital intelligence and take the lead in exploring the low-altitude economy
In 2023, the company maintained rapid growth in digital intelligence and industry. The main holding subsidiary Jiangsu Dinoni increased new orders by about 70% year-on-year, and revenue increased by more than 100% year-on-year. At the same time, seizing opportunities to accelerate business development in the low-altitude economy, mainly relying on the company's industry think tank (Beijing Civil Aviation Institute) +planning and design industry planning (company headquarters) +industry application (China Aviation), formed a business pattern involving the entire industry chain. In 2023, the company participated deeply in the construction and service projects of civil drone test flight bases in many cities in the province, and actively built a provincial government information service platform for the low-altitude navigation industry based on the promotion, implementation and application of a series of low-altitude economic integration products such as “Lu Zhi Bao”, “Road Area Bao”, and “Hangubao”.
Risk warning: New orders fall short of expectations, and EPC project repayments fall short of expectations.