The company released the “2023 Annual Report”, which achieved revenue of 2,516 billion yuan, a year-on-year increase of 59.54%; achieved net profit of 343 million yuan, an increase of 41.10% over the previous year; and realized net profit deducted from non-mother of 230 million yuan, an increase of 37.00% over the previous year.
The first growth curve business developed steadily and rapidly, and the second growth curve business entered the harvesting stage ahead of schedule, and achieved rapid growth in performance. During the reporting period, the company achieved operating income ($2,516 million, +59.54% YoY); realized net profit to mother ($343 million, +41.10% YoY); and realized deduction of non-net profit ($230 million, +37.00% YoY).
By industry: the first growth curve business is developing steadily and rapidly, and the second growth curve business has entered the harvesting stage ahead of schedule. 1) First curve: The special sector industry grew steadily, with revenue +15.69% year-on-year.
The revenue of the aerospace surveying and operation control, smart government, meteorological ecology, and enterprise energy industries increased significantly year-on-year, by 61.08%, 106.87%, 101.58%, and 111.74%, respectively. It mainly benefited from the full implementation of the company's group strategy, accelerated business exploration by various subsidiaries, and continuous breakthroughs were achieved. 2) Second curve: The company used the cloud service model to build the second growth curve business. During the reporting period, the online business received 20,914 certified individual developers and 21,192 certified enterprise developers. Developers built 13,769 active ecological applications based on the digital Earth's online capabilities, reached a total of 45.55 million end users, achieved revenue of 20.0841 million yuan, completed the verification of the second growth curve scenario, and entered the harvesting stage ahead of schedule.
By product: ① GEOVIS technology development and services: revenue +73.90%, gross margin -1.71 pct to 55.44% year over year, mainly due to rapid increase in hardware costs; ② GEOVIS software sales and data services: revenue +19.02% year over year, gross margin -13.32 pct to 70.93% year over year, mainly due to a sharp increase in outsourcing costs. ③ Special equipment and system integration: Revenue +43.43% year-on-year, mainly due to the expansion of the company's business scale and continuous growth in sales orders.
The comprehensive gross margin declined slightly, and the three cost ratios were well controlled. In terms of profitability, the company's gross sales margin was 48.33%, down 0.53 pct from the same period in '22. In terms of expenses, the company incurred sales expenses during the period ($187 million, -26.46% year-on-year), mainly due to an increase in sales staff labor costs, travel expenses and marketing; management expenses ($201 million, +12.38% year over year), mainly due to an increase in labor costs and office expenses for management personnel; and financial expenses (-35 million, -32 million in the same period in '22), mainly due to an increase in interest income. R&D expenses (373 million, +31.85% over the same period) are mainly due to the company strengthening technological innovation, continuing to increase R&D investment, and building a richer product system. The company's three expenses rate was 14.02%, a decrease of 1.00pct compared to the same period in '22. The company's net profit margin on sales was 19.16%, a year-on-year decrease of 0.08pct.
The forward-looking layout of the low-altitude economy, and related transactions highlight growth expectations. The company has been deploying in the low-altitude economy since 2020. In the early stages, it already has a foundation for low-altitude navigation products and projects. The relevant business layout covers the main directions of low-altitude service infrastructure platform product research and development, and related industrial ecological construction around low altitude, providing comprehensive solutions for application scenarios in the fields of low-altitude logistics, general aviation transportation, urban management, and public services. The subsidiary Beidou Fuxi relies on Beidou grid code technology to actively participate in low-altitude economic construction, and has made positive progress in low-altitude airspace infrastructure and application scenario projects in Quzhou and Chaoyang. Other subsidiaries, such as Starmap Intelligence, can provide products such as digital intelligence and low-altitude brains to empower them. According to the “2024 Daily Related Transaction Forecast Notice” issued by the company, the company expects related purchases to Beidou Fuxi to reach 100 million yuan in 24, +233.33% and 425.46% compared with the estimated amount and actual amount generated in 23, and the estimated related sales amount to reach 100 million yuan, an increase in 24 years.
The core players in the downstream commercial space industry have benefited from a sharp rise in the quantity and quality of space infrastructure. Commercial aerospace is driven by both policy and technology, and satellite componentization, spectralization, and batch production processes are continuously optimized, and satellite launch manufacturing costs will be significantly reduced. Satellite accuracy continues to improve, and data acquisition costs have been further reduced, providing a higher quality data source for space information applications. As a midstream and downstream core enterprise for space information applications, the company can provide 1) offline digital Earth products: launch the “Insider” series of products for the field of space surveying and operation control, including the Insider basic platform and multiple Insider application platforms such as Tianlu, Sky Control, Tiangan, and Tianfong; 2) Online Digital Earth products: The company relies on the Geovis Earth online digital Earth product system to form a portal for space information to reach mass users, forming a frontier position for serving mass users.
Profit forecast: The company's net profit for 2024/2025/2026 is expected to be 495/66/ 865 million yuan, corresponding to 40, 30, and 23 times the valuation, maintaining the “Highly Recommended” rating.
Risk warning: Defense orders and revenue recognition fluctuate, and the development of the civilian goods market falls short of expectations.