Performance Forecast
According to the company's annual report, the company achieved revenue of 2,678 billion yuan in 2023, up 19.77% year on year. Among them, by business, construction and infrastructure growth rate +5.29% year on year, geospatial information growth rate +0.73% year on year, resource and utilities growth rate +41.29% year on year, and robot and autonomous driving growth rate +61.64% year on year. By region, the company's domestic business accounted for 73.15%, with a year-on-year growth rate of +12.04%, and overseas business accounting for 26.85% (up about 5 percentage points from last year), with a year-on-year growth rate of 47.51%. In 2023, it achieved net profit of 449 million yuan, an increase of 24.32% over the previous year. On the one hand, it benefited from steady growth in overall revenue and high overseas profitability. The gross profit margin of overseas business was 72.67%, which is about 20 percentage points higher than that of domestic business.
According to the company's quarterly report, 2024Q1 achieved operating income of 617 million yuan, a year-on-year increase of 20.53%, achieved net profit to mother of 103 million yuan, an increase of 30.35% over the previous year, and a comprehensive gross margin of 58.80%. After being baptized by the epidemic in the previous two years, the performance growth rate returned to a high growth rate of more than 30%. Looking ahead to 2024, the company will face two major development opportunities: overseas and low altitude. The overall business target for 2024 is to achieve net profit of 550 million yuan to mother, an increase of about 25% over the previous year.
Core highlights
1) Low-altitude economy. The low-altitude economy is juxtaposed with commercial aerospace and biomedicine, and it has become a strategic emerging industry that is currently being rapidly deployed from the central government to the local authorities. The low-altitude economy industry chain covers the four major fields of infrastructure, aircraft, operation, and security. Infrastructure is the key support for various low-altitude economic activities and is expected to benefit first. Infrastructure can be divided into four networks: facility network, service network, route network, and air network. Among them, the air network mainly implements communication, navigation, and monitoring functions.
We believe that the company has strong technical and product reserves at low altitude and is expected to fully benefit.
At the technical level, the company takes high-precision positioning technology as the core and actively deploys drone flight control technology; at the product level, the company has software and hardware support capabilities such as GNSS chips, OEM boards, drones, lidar, etc.; at the application level, the company has rich engineering capabilities in 3D modeling, emergency monitoring, and drone flight suits/training scenarios.
2) Go out to sea. Overseas is a market where the company's gravity has been strong in recent years. The compound growth rate of overseas revenue has been above 50% in the past three years, and the gross margin of overseas business has increased from 60% + to 70% +, and the product competitiveness is outstanding. The company's main products sold overseas have expanded from RTK equipment to autonomous driving solutions for agricultural machinery, and are expected to extend to other categories such as unmanned equipment and lidar. The focus is on the blue ocean in the overseas market. According to preliminary estimates, the company's share is only in single digits. The ceiling of the overseas market is still very high, and the continuation of growth is still very good.
3) Others. Fine management, the sales expense rate and management expense ratio declined in 2023. The company's management had good reputation and the management system gradually matured; the company first used RTK as the carrier, had chip design capabilities upstream based on high-precision navigation and positioning algorithms, and had downstream industry application capabilities, then extended algorithm capabilities to the field of autonomous driving to complete another capability leap. Finally, the company deployed drone flight control technology, and the algorithm capabilities extended from navigation and positioning to the control field. Potential growth, in addition to low-altitude and offshore, new surveying, and autonomous driving businesses enabled by SWAS are also potential revenue growth points; trillion treasury bonds bring displacement monitoring business opportunities in emergency response and water conservancy; equipment updates and a new round of agricultural machinery subsidy policies are expected to further consolidate the growth momentum of agricultural machinery autonomous driving.
Investment advice
We adjusted the company's net profit forecast values of 5.84 billion yuan and 759 million yuan (previous values of 640 million yuan and 847 million yuan) to add the 2026 net profit forecast value of 990 million yuan. The corresponding EPS was 1.07, 1.39, and 1.82 yuan, respectively. The current stock price corresponding to 2024-2026 PE is 27.41X/21.07X/16.17X, respectively, maintaining a “buy” rating.
Risk warning
Low-altitude economic development falls short of expectations, overseas market expansion falls short of expectations, and the increase in the passenger car autonomous driving penetration rate falls short of expectations.