Incident: The company released the 2023 annual report forecast. It is expected to achieve net profit of 2,912 million yuan, YoY -29.90%; realized net profit to mother of 238 million yuan, YoY -696.55%; and gross profit margin of 17.66%, an increase of 3.47 pct over the same period last year.
Comment: Revenue declined due to factors such as product structure and delivery cycle adjustments, etc., and ENC depreciation was taken lightly. By business, in 2023, the company's industrial Internet and intelligent manufacturing business achieved revenue of 191 million yuan, YoY -22.91%, mainly due to smart factory and system engineering business delivery cycle adjustments and failure to meet settlement requirements. The gross profit margin was -5.4%, a year-on-year decrease of 5.78pct; the smart transportation and safe city business achieved revenue of 1,324 billion yuan, YoY -16.61%. The decline was due to the impact of some business engineering settlement progress. The gross profit margin was 27.52%, up 4.33 pcts year on year; the green service electronics manufacturing business achieved revenue At 1,368 billion yuan, YoY -40.30%, the decline was due to the product restructuring market falling short of expectations. The gross profit margin was 10.65%, up 1.53 pcts year on year. On the cost side, the company generated sales expenses/management expenses/R&D expenses of 0.41/2.64/21,000 yuan in 2023, respectively, +6.63%/-8.02%/+0.07%. The increase in sales expenses was mainly due to an increase in advertising expenses and exhibition fees. The decrease in management expenses was mainly due to a decrease in the number of employees and a decrease in employee remuneration. Furthermore, during the reporting period, the company reduced the full amount of ENC's 27% long-term equity investment of 230 million yuan based on prudential principles, which was the main reason for the loss.
It won the bid for the next-generation satellite terminal project and is looking forward to the expansion of satellite Internet services. In August 2023, the company successfully won the bid for a next-generation satellite terminal project, including software and hardware, which can support satellite communication between terminals, with a bid amount of more than 9 million yuan. The company's next-generation satellite communication terminal related technology can be applied to mobile phones, vehicles, ships, airplanes, etc. The company also collaborated with Southeast University, Xingsi Semiconductor, etc. to build a new industry-university-research scientific and technological innovation platform, and established the “Low Orbit Satellite Internet Terminal Industry Chain Alliance”. In early 2023, Starbucks Semiconductor launched the CS7610 broadband satellite mobile phone baseband chip and CS7810 ultra-wideband satellite terminal baseband chip supporting the 5G NTN standard. As satellite internet construction continues to advance, the satellite business is expected to become the company's new growth engine.
Profit forecast and investment advice: Nanjing Panda is deeply involved in satellite mobile communication and other technologies, and is optimistic that the company's satellite business will achieve rapid growth under the wave of satellite internet construction. The company is expected to achieve revenue of 2,916/32.53/37.44 billion yuan in 2023-2025, and net profit of 0.32/0.57/085 billion yuan, corresponding to EPS of 0.03/0.06/0.09 yuan. It is covered for the first time, giving it an “increase in holdings” rating.
Risk warning: Competition in the industry has intensified, and the satellite business has fallen short of expectations.