Incident: The company released its 2023 annual report on April 15, achieving full year revenue of 2.52 billion yuan, YoY +59.5%; net profit to mother of 340 million yuan, YoY +41.1%; net profit after deducting non-return to mother of 230 million yuan, YoY +37.0%. The company's performance is within the scope of the performance forecast data. The high increase in performance is mainly due to the company actively expanding product application areas, continuing to deepen the implementation of group, ecological and international development strategies. The first growth curve business is developing steadily, the second growth curve has entered the harvesting stage ahead of schedule, and the profit model is gradually being upgraded.
4Q23 revenue surged 49% year over year; profit model gradually upgraded. Looking at a single quarter, the company: 1) 4Q23 achieved revenue of 1.12 billion yuan, YoY +49.0%; net profit to mother of 240 million yuan, YoY +39.6%. 4Q23 revenue and net profit both grew rapidly. 2) 4Q23 gross margin was 47.8%, basically the same as the same period last year; net margin was 28.2%, an increase of 0.30ppt over the previous year. In 2023, consolidated gross margin decreased 0.53 ppt to 48.3% year over year, and net margin decreased 0.09ppt to 19.2% year over year. The company's first growth curve business developed steadily. The second growth curve created by the cloud service model entered the harvest stage ahead of schedule, and the profit model was gradually upgraded.
Cost control capabilities have improved, and R&D investment increased 67% year over year. The company's expense ratio for the 2023 period was 28.8%, a year-on-year decrease of 0.34ppt. Among them: 1) the sales expense ratio was 7.4%, a year-on-year decrease of 1.32ppt; sales expenses were 190 million yuan, up 35.6% year on year; 2) the management expense ratio was 8.1%, a year-on-year decrease of 0.14 ppt; management expenses were 200 million yuan, up 54% year on year; 3) R&D expenses were 14.7%, up 0.51 ppt year on year; and R&D expenses were 370 million yuan, up 67.1% year on year. Relying on the Geovis Earth online digital earth product system, the company has formed three major online service systems for data, computation, and application on the cloud, and realized the online transformation and upgrading of core technology and business transformation. In 2023, the online business entered the harvest period ahead of schedule, achieving annual revenue of 0.2 billion yuan and gross margin as high as 86%. It may be expected to increase the company's overall profitability in the future.
Net cash flow from operating activities has improved markedly; the low-altitude economy has brought important development opportunities. As of the end of 4Q23, the company: 1) accounts receivable and notes were $1.8 billion, up 64.1% from the beginning of the year, mainly due to an increase in revenue; 2) inventory of $390 million, which was basically the same as at the beginning of the year; 3) contract liabilities of $65 million, a decrease of 70.2% from the beginning of the year, mainly due to an increase in in-hand order purchases; 5) Net cash flow from operating activities was 130 million yuan, which was -0.3 billion yuan for the same period last year, a decrease of 70.2% from the beginning of the year, mainly due to the company's effective capital implementation Management measures to increase repayment efforts. Furthermore, the company is seizing opportunities for low-altitude economic development. The participating company Beidou Fuxi has bid for low-altitude economic construction projects in Quzhou, Liaoning, Chengdu and other places in 24 years. Subsequent companies will continue to promote low-altitude economic and ecological applications, and is committed to providing comprehensive solutions in various fields such as low-altitude logistics, general aviation transportation, urban management, and public services.
Investment suggestions: The company adheres to the strategy of group, ecological and international development, focusing on six major sectors: special fields, smart government, meteorological ecology, space measurement and operation control, enterprise energy, and online business. Benefiting from the development of the country's aerospace information industry, low-altitude economy industry, etc., performance is expected to continue to rise in the next few years. We estimate that the company's net profit from 2024 to 2026 will be 475 million yuan, 666 million yuan, and 927 million yuan respectively. The current stock price corresponding to 2024-2026 PE is 42x/30x/21x. Maintain a “Recommended” rating.
Risk warning: downstream demand falls short of expectations; risk of price and profit margin changes, etc.