Key points of investment:

Maintain the increase in holdings. Maintain the forecast that EPS will increase by 13/ 8% to 1.16/1.25 yuan in 2024-2025, and EPS is 1.35 yuan, up 7% in 2026. Maintain the target price of 13.1 yuan, corresponding to 11.3 times PE in 2024.

Net profit to mother increased by 2.1% in 2023, in line with expectations. Gross margin increased and expense ratio decreased. (1) In 2023, revenue of 5.35 billion yuan decreased by 8.3% (Q1-Q4 increased 5.8/1.4/-4.5/ 0.2%). By business, planning and research/survey and design/comprehensive inspection/digital and smart business increased 8/-15/32/ 18% by 4.8/31.7/5.2/390 million yuan respectively; net profit to mother of 698 million yuan increased 2.1% (Q1-Q4 increased 1.7/1.2/-0.6/ 3.3%). (2) 2023 gross profit margin 39.00% (+2.05pct), expense ratio 18.35% (-0.54pct), net return to mother rate 13.04% (+1.33pct), ROE 14.92% (-1.71pct), balance ratio 61.68% (-0.47pct).

Net operating cash flow remained good in 2023, and accounts receivable and impairment increased. (1) Net operating cash flow of $500 million in 2023 ($490 million in the same period last year), Q1-Q4 was -2.0/-0.6/-1.9/95 million (-30/-2.4/0.7/950 million yuan in the previous year). In 2023, the payout ratio was 93% (88% in the same period last year), and the payout ratio was 62% (55% in the same period last year). (2) The total cash flow from operation+investment was 270 million yuan (310 million yuan for the same period last year). (3) Accounts receivable of 4.4 billion yuan (+9%), impairment losses of 290 million yuan (250 million yuan in the same period last year).

A low-altitude economic business pattern was formed, and Jiangsu Dinoni's revenue increased by more than 100% in 2023. (1) Relying on an industry think tank (Beijing Civil Aviation Institute) +planning and design industry planning (company headquarters) +industry application (China Aviation) to form a low-altitude economic business pattern. (2) Jiangsu Dinoni increased new signings by about 70% in 2023, revenue increased by more than 100%, and developed the latest software products AIRoad 2.0, VRRoad 2.0, and EICAD5.

(3) In 2024, we aim to increase revenue by more than 5%, net profit to mother grow by more than 5%, and net operating cash flow of not less than 400 million yuan. (4) The proposed dividend dividend rate is 3.91%, and the dividend payment ratio is 30.38%.

Risk warning: macroeconomic policies have been tightened beyond expectations, infrastructure investment has fallen short of expectations, etc.