Incident: Kai Mingchen released its 2023 report. In 2023, it achieved revenue of 4.507 billion yuan, up 1.58% year on year; net profit to mother was 741 million yuan, up 18.37% year on year, in line with market expectations.
Key points of investment
There was a slight decline in gross margin, and cost reduction and efficiency increased significantly. The company's Q4 revenue in 2023 was 1,974 billion yuan, down 13.01% year on year, and net profit to mother was 500 million yuan, down 42.93% year on year. By business, in 2023, the company's safety product revenue was 2,578 billion yuan, -13% year-on-year, with a gross profit margin of 60%, a year-on-year decrease of 2.7 pct; safety operation and service revenue was 1,899 billion yuan, +31% year-on-year, with a gross profit margin of 55%, a year-on-year decrease of 8.1 pct. The company's gross profit margin in 2023 was 57.76%, down 4.9pct year-on-year. The company's cost reduction and efficiency effect was obvious. The total three-fee investment decreased by 11.69% compared to the same period last year, and the cost ratio (three fees) decreased by 6.8 pct. Production efficiency (per capita revenue) increased significantly, up 7.83% year over year.
New business segments drive revenue growth and rapid commercialization of new technologies. The company's new business segments (cloud security, data security 2.0 & 3.0, industrial internet security, secure operation) achieved revenue of 2.142 billion yuan, an increase of 13.82% over the same period last year, accounting for 47.54% of annual revenue, and a further increase in the share of new business revenue. Among them, the cloud-related security business achieved revenue of 572 million, an increase of 34.50% over the same period of the previous year, and the security operation center business achieved revenue of 1,061 million yuan, an increase of 13.01% over the same period of the previous year, showing initial results in creating new quality productivity. The revenue growth rate of identity trust products and 5G+ industrial Internet security detection products all exceeded 200%; data security management platforms, network security shooting ranges, full traffic detection, Xinchuang firewalls, and EDR (terminal threat detection and response) all achieved a growth rate of more than 50%. Based on long-established customers in the government and enterprise industry, the company is actively developing new individual/family customer groups. Among them, the number of mobile cloud computer users is 3 million, Qingsong Guan has 50,000 users, and the number of users is beginning to take shape.
The 24Q1 forecast is a good growth rate, and revenue growth is expected to resume. The company released its 2024 Q1 performance forecast. It is expected to achieve revenue of 900 to 950 million yuan, a year-on-year increase of 14.26% to 20.61%, deducted non-net profit of -58 million yuan to -38 million yuan, an increase of 41.82%-61.88% over the previous year, a marked increase in per capita income, gross profit growth at the same rate, with remarkable effects of improving the quality and efficiency of the main business. Continuously optimizing marketing strategies. While firmly laying out emerging business sectors and adhering to R&D innovation, the profit changes in cost structure, investment income and fair value change earnings due to the stock prices of listed companies invested by listed companies Volatility decreased by $11,869.16 million year over year. The company continued to strengthen accounts receivable and repayment management, and repayment payments increased by more than 60% over the same period last year.
Profit forecast and investment rating: Considering the impact of the company's project bidding pace, we lowered the company's 2024-2025 EPS forecast from 1.32/1.74 yuan to 0.76 billion yuan, and the 2026 EPS forecast is 1.19 yuan. It is expected that as orders from downstream customers resume, the company is expected to take the lead in benefiting and maintaining a “buy” rating.
Risk warning: Satellite constellation construction falls short of expectations; technology research and development falls short of expectations; downstream application demand falls short of expectations.