Incident: On March 26, the company released its 2023 annual report. In 2023, the company achieved revenue of 439 million yuan, +30.9% year-on-year, and realized net profit of 109 million yuan, or +13.77% year-on-year.
Performance is growing steadily, and orders continue to increase: In 2023, the company's revenue continued to grow rapidly, mainly benefiting from the rapid development of the company's industrial Internet industry and steady growth in demand in the downstream terminal application market. Furthermore, the company initially achieved development from a product enterprise to an end-to-end full-stack product solution enterprise, helping the company further enhance its order development capabilities and market competitiveness, and the company's orders remained stable and continued to increase. In 2023, the company's gross margin was 56.94%, 1.26pct year on year, and the gross margin of each business segment remained stable; the cost ratio for the period was 34.25%, -2.63pct year on year. Among them, the sales/management/finance/R&D expense ratios were 12.82%/7.15%/0.30%/13.99%, respectively, -0.96/1.50/0.02/-3.19pct.
Focusing on the industrial communications market, all segments of the business are improving: In 2023, the company achieved comprehensive development of the market, products, technology, and solutions using the HaaS platform as a fulcrum. Looking at downstream applications, the company's smart energy/industrial internet/smart transportation/smart city/other industry sectors achieved revenue of 1.77/0.97/0.77/0.51/037 billion yuan respectively. Among them, the industrial internet/smart city/smart transportation industry sector experienced high growth, with revenue growth of 79.48%/69.57%/49.25%, respectively. Looking at the product structure, the company's industrial switching products/solution business/industrial gateway and wireless products achieved revenue of 310/0.65/ 0.52 billion yuan respectively. Among them, revenue from industrial switching products/industrial gateways and wireless products increased 21.64%/9.32% year-on-year respectively. The solution added new business lines in 2023 and achieved rapid development.
We believe that, on the one hand, the industrial Internet has entered a stage of full expansion, and infrastructure construction is expected to be rapidly promoted and applied; on the other hand, with the development of new digital technology, new technologies, new scenarios, and new models are expected to be implemented at an accelerated pace. The company has accumulated rich industrial application scenarios and technical strength, and scenario-based solution capabilities, and is expected to continue to benefit.
Increase overseas market expansion and usher in new development opportunities: In 2023, the company increased its overseas marketing efforts and participated in relevant conferences and exhibitions such as Japan IT Week, Italy's SPSitalia, Vietnam ETE 2023, Dubai Gitex, US SCTE, Germany's SPS IPC DRIVES, etc., to enhance brand awareness, and at the same time accelerate the layout and expansion of overseas market channels to effectively explore local markets. In 2023, the company's overseas market business achieved revenue of 47 million yuan, +20.51% over the same period last year. Sales of the company's products have achieved steady growth in Germany, Italy, Spain, Brazil, South Korea, Austria, Egypt, Argentina, the United Kingdom, Vietnam, and Thailand.
Profit forecast and investment rating: The company's net profit for 2024-2026 is estimated to be 1.3 2/1.59 billion yuan, respectively, and the current stock price is 27/22/18 times PE, respectively, maintaining a “buy” rating.
Risk warning: Customer growth falls short of expectations, downstream demand falls short of expectations, risk of fluctuations in raw material prices, risk of macroeconomic fluctuations.