1Q24 net profit to mother increased 18.2% year over year, which is basically in line with market expectations
The company announced 1Q24 results: revenue of 3.391 billion yuan, +34.4% year on year; net profit to mother of 590 million yuan, +18.2% year on year; net profit after deducting non-return to mother of 586 million yuan, +20.3% year on year; cash flow from operating activities of 470 million yuan, +24.6% year over year. The company's 1Q24 performance was basically in line with market expectations.
Development trends
The revenue side achieved a rapid rebound, and expenses were well controlled. Some of 1Q24's deferred projects were successfully delivered, and revenue grew rapidly year-on-year, driven by automation and information technology services. Affected by some low-margin projects, the company's gross margin fell 7.6ppt to 32.7% year on year; the 1Q24 sales/management/R&D expense ratio decreased by 0.4/1.4/3.4 ppt year on year, respectively. The total cost of the three expenses was 481 million yuan (down 1.5% year on year), and the cost control was effective. As of 4Q23, the total number of employees in the company was 5,714 (basically the same as compared to the previous year), we believe that the company's personnel are expected to remain stable, and the cost control effect may continue to show. Due to the company's effective cost control, the net profit margin for 1Q24 fell by only 2.4ppt to 17.4% year on year. 1Q24 The company's operating cash flow was 470 million yuan (+24.6% year over year), which was better than profit side performance.
The contract was signed with Guangxi Hongwang, and the full-stack localized PLC was quickly implemented. On March 27, the signing ceremony between the company and Guangxi Hongwang 1550 cold rolling turnkey project was successfully held. According to the company's official WeChat account 1, the project will use Baoxin full-stack localized PLC products and DSF (Digital Shopfloor) solutions for automated digital industrial sites, and is expected to be officially put into operation in March 2025. The 1550 cold rolling project has a design capacity of 1.5 million tons/year, and the contract amount is 700 million yuan. The company expects subsequent plans to reach a scale of 10 million tons/year, and we estimate that the total contract amount may reach 3-4 billion yuan.
Baoxin Turing robots appeared at the Hanover Industrial Fair in Germany. On April 22, the company's holding company Turing Robotics showcased a variety of new industrial robot solutions at the Hanover Industrial Fair in Germany, such as a 30 kg collaborative palletizing workstation, an integrated force-controlled grinding workstation, an industrial welding kit and process package, a mobile workstation for collaborative welding robots, and a dual-machine collaborative workstation. We believe that its industrial robot solutions are diverse and innovative, and are expected to form application cases in Baowu Group and continue to be promoted in the industry in the future.
Profit forecasting and valuation
Keep the company's profit forecast unchanged. Maintain an outperforming industry rating and maintain the target price of 55 yuan/2.4 US dollars for A/B shares (based on the 2024 SOTP, 45 x 2024e P/E for software business, 30 x 2024e P/E for IDC business; 30% discount for B shares). The current A share price corresponds to 30.5x/24.7x2024e/2025e P/E, and the B share price corresponds to 10.8x/8.3x 2024e/2025e P/E, with 37.2%/17.1% upside, respectively.
risks
Steel companies' investment in informatization fell short of expectations; IDC project implementation progress fell short of expectations; domestic PLCs and robots fell short of expectations.