Net profit due to mother fell 109% in '23, downgraded to “increase holdings” rating
Jiayuan Technology released its annual report. In 2023, it achieved revenue of 227 million yuan (yoy -15.63%), net profit to mother of 5.3529 million yuan (yoy -108.69%), and deducted non-net profit of 16.2805 million yuan (yoy -132.03%).
Among them, Q4 achieved revenue of 41 million yuan (yoy -61.64%, qoq -27.01%) and net profit to mother of 376.74 million yuan (yoy -251.01%, qoq -885.18%). We expect the company's 2024-2026 EPS to be 0.64, 0.99, and 1.47 yuan respectively (previous value 2024-2025 1.77 and 2.63 yuan). Comparatively, the company Wind agreed to expect an average PE value of 49 times in 24, giving the company 49 times PE in 24, with a target price of 31.40 yuan (previous value of 88.5 yuan), and downgraded it to an “increase in weight” rating.
The progress of the military business fell short of expectations, and gross margin declined significantly
In 2023, the company's military business achieved revenue of 183 million yuan, a year-on-year decline of 15.91%, mainly affected by the industry. The slow progress in bidding, contract signing, and inspection of some of the company's military business projects led to a decline in revenue. The medical business achieved revenue of 38.09 million yuan, an increase of 82.88% over the previous year; the government business achieved revenue of 6.2 million yuan, a year-on-year decrease of 79.95%. In terms of gross margin, the company's overall gross margin level was 48.51%, down 6.96 pcts year on year. Among them, the military business gross margin was 53.53%, a decrease of 10.76pct; medical business was 30.52%, a decrease of 6.81 pct; mainly due to higher costs and lower gross margin due to high investment in aviation and aerospace contract R&D projects and technical service costs.
The cost ratio increased significantly during the period, and the net operating cash flow improved. The company's expense ratio for the period '23 was 50.48%, an increase of 18.83 pcts over '22. Among them, the sales expense ratio was 8.94%, an increase of 7.21pct; the management expense ratio was 16.54%, an increase of 6.86pct; and the R&D expense ratio was 27.88%, an increase of 8.53pct. The main reason for the increase in the cost ratio was the company's strengthening of various business activities while share payment expenses increased. The company's net operating cash flow in '23 was $52.46 million, a sharp drop from -191 million yuan in '22, mainly due to an increase in the company's sales repayments. The company's balance ratio in '23 was 8.10%, up 2.81 pct from '22, but it is still at a low level.
The impact of fluctuations in market demand in 24Q1 has not been eliminated. The company's performance declined year on year. The company released its 2024 quarterly report, achieving revenue of 0.16 million yuan, a year-on-year decline of 67.84%, mainly due to delays in the bidding and acceptance process for some projects; net profit to the mother was -0.16 billion yuan, a decrease of 288.85%. By the end of 24Q1, the company's accounts receivable and notes were 243 million yuan, a decrease of 10.91% from the beginning of the year, and contract liabilities were 6.77 million yuan, an increase of 17.33% over the beginning of the year; in addition, the company lost 2,4591 million yuan in credit impairment due to accounts receivable, and the accrued amount increased by 631.58% year on year; the accrued asset impairment loss was 69,000 yuan, further reducing the profit scale.
Risk warning: There is a difference between the military cybersecurity market size estimates and the actual situation; orders for space-borne products fall short of expectations; application expansion in airborne and other fields falls short of the expected risk. Commercial cryptographic business expansion falls short of anticipated risk; company product quality or technology risk.