Gold Card Intelligence released the 2023 Annual Report and 2024 Quarterly Report. Throughout 2023, the company achieved operating income of 3.175 billion yuan, +15.91% year-on-year; net profit to mother of 409 million yuan, +51.09% year-on-year; deducted non-net profit of 358 million yuan, +27.04% year-on-year. In the first quarter of 2024, the company achieved operating income of 719 million yuan, +12.48% year on year; net profit to mother of 99 million yuan, +22.03% year over year; after deducting non-net profit of 85 million yuan, +35.36% year over year. The company previously released a performance forecast. The net profit for the full year of 2023 is expected to be 379-446 million yuan, and the company's actual performance in 2023 is in line with expectations. Maintain a “Highly Recommended” rating!
23Q4 gross margin increased by nearly 10 percentage points year-on-year, and the leaders' ability to reduce costs continued to be realized. In 2023, the company's gross margin/net margin was 42.31%/13.23% respectively, up 4.09 and 3.19pcts year-on-year.
Looking at a single quarter, the 23Q4 company's gross profit margin and net margin were +9.87pcts and +1.58pcts, respectively; 24Q1 gross profit margin and net margin were +0.76pcts and +1.16pcts, respectively. The company reduces product costs through measures such as R&D and design improvement and material procurement cost reduction, and controls reasonable expenses through comprehensive budget management. The market share in the smart gas sector continues to move closer to the leader.
The 24Q1 company's performance maintained high growth, and the logic of urban renewal was on the rise. In 24Q1, the company's revenue increased 12.48% year on year, and after deducting non-net profit, it increased 35.36% year on year. As a global leader in intelligent gas systems, the company has fully benefited from 23 years of urban lifeline safety projects, renovation of old neighborhoods, urban village renovation, etc., as well as 24 years of policies such as equipment renewal and municipal infrastructure renewal. These policies have catalyzed the need to update and replace old and substandard mechanical watches, and help the company widely promote the application of digital gas solutions in urban combustion enterprises. In the future, with the further implementation of these policies, the company's performance is expected to continue to be released.
By business, the company's smart water business has maintained rapid growth. In 2023, the company's smart civil gas terminals and systems/smart industrial and commercial gas terminals and systems/smart water terminals and systems achieved revenue of 18.64/6.58/279 million yuan respectively, up 16.25%, 8.12% and 53.22% year-on-year. The company began entering the smart water sector in 2018. The business began contributing to performance in 2020. In 2021/2022/2023, the company's smart water performance increased by 87.7%/65.6%/53.22% year-on-year respectively, and has been growing at a rate of more than 50% for three consecutive years. Smart Water is a successful replication of the company's successful experience in the gas business in another scenario, fully confirming the scalability of the company's overall IoT solution. Furthermore, the growth rate of the company's industrial and commercial gas terminals and systems has been corrected in 23 years, which may reflect signs of a steady recovery in China's economy.
Expanding hydrogen energy metering products is the third growth curve. The company independently developed TBQM gas turbine flowmeters, TUS ultrasonic gas flowmeters, T3RM three-rotor waist wheel flowmeters and other products suitable for hydrogen energy measurement scenarios. Since this year, various regions have continuously introduced policies to facilitate large-scale production and application of hydrogen energy. As the only domestic enterprise that has passed 5%, 10%, 15%, and 30% hydrogen blending tests, the company is expected to benefit.
Maintain a “Highly Recommended” rating. Policies such as equipment updates blew frequently this year. Urban renewal and lifeline safety projects were on the rise last year. As the absolute leader in smart gas metering, Jinka Smart is expected to fully benefit. In addition to this, the company's smart water business is showing strong performance, hydrogen energy measurement products are scarce, and the company's growth space is expected to open up further. The company is expected to achieve operating income of 37.73/45.32/5.397 billion and net profit of 491/6.06/737 million yuan in 24/25/26, respectively, corresponding PE 10.8/8.8/7.2 times.
Risk warning: The implementation of the old neighborhood renovation policy falls short of expectations; the implementation of the gas favorable price mechanism falls short of expectations, and the expansion of hydrogen energy measurement falls short of expectations.