Incident: The company released its financial report for the first quarter of 2024. The 24Q1 quarter achieved total revenue of 3.391 billion yuan, an increase of 34.44% over the previous year, net profit attributable to the parent company of 590 million yuan, an increase of 18.19% over the previous year, after deducting net profit of 586 million yuan from the mother, an increase of 20.31% over the previous year.
The revenue side somewhat exceeded expectations in the first quarter. Q1 The company's single-quarter revenue returned to a positive year-on-year growth trajectory, and achieved a high growth rate. To a certain extent, it also reflects that in the current context where the company's main downstream steel industry is under relative pressure, Baoxin is still able to maintain a certain degree of resilience on the revenue side.
However, we believe that this resilience comes, on the one hand, from the continuous release of demand for enterprise informatization upgrades brought about by Baowu's mergers and acquisitions, and on the other hand, from Baoxin's development layout in innovative businesses such as robotics and non-steel markets such as non-ferrous metals, chemicals, and mining.
There was a decline in gross margin in the first quarter, but there was also a significant improvement in expense ratios. Q1 The company's gross sales margin was 32.68%. Compared with a decrease of 7.58pct in the same period last year, we judge that the year-on-year change in gross margin may only be a phased fluctuation. In addition, the company also had obvious optimization control on the cost side in the first quarter. Sales, management and R&D expenses decreased by 0.4 pct, 1.4 pct, and 3.4 pct compared to the same period last year. The improvement in the cost ratio during the period offset the impact of the decline in gross margin on profitability to a certain extent.
Investment advice: We reaffirm the recommended logic for Baoxin Software: demand for informatization upgrades continues to be released under Baowu's mergers and acquisitions, combined with advanced intelligent manufacturing construction centered on industrial Internet platforms, PLC, and Baoluo industrial robots. Baoxin's informatization and automation business represented by the steel industry can still be expected; the data center IDC business is expected to maintain steady growth with competitive advantages in terms of resource acquisition, financing capacity, customer base and professional operation. Baoxin Software's 2024-2026 revenue is estimated to be RMB15.021 billion, RMB17.093 billion and RMB18.922 billion respectively, with net profit attributable to the parent company being RMB3,028 billion, RMB3,821 billion and RMB4.536 billion respectively. Maintain a “buy” rating.
Risk warning: IDC construction and listing progress falls short of expectations; demand for steel informatization falls short of expectations; technological progress of industrial Internet products falls short of expectations.