Incidents:

Nova Nebula released its 2024 quarterly report today. During the reporting period, the company achieved revenue of 681 million yuan, an increase of 22.66% over the previous year, realized net profit of 123 million yuan, an increase of 44.54% over the previous year, realized deducted non-net profit from mother of 116 million yuan, an increase of 39.91% over the previous year, and achieved net operating cash flow of -632 million yuan, an increase of 8.06% over the previous year.

Comment:

Overall, the results were in line with expectations. The company's 1Q24 results were announced in the listing announcement. At that time, the year-on-year growth ranges were: revenue 26.06%-35.06%, net profit to mother 41.52%-76.90%, and 32.12%-68.16%. Judging from actual results, the company's revenue was slightly lower than forecast expectations, and the company's net profit to mother and non-net profit to mother were all in line with forecast expectations.

Profit margins have increased significantly. The company's 1Q24 gross margin was 56.77%, up 7 percentage points year on year; sales expense ratio, management expense ratio, and R&D expense ratio were 15.82%, 5.52%, and 18.10%, respectively, up 3.20, 0.10, and 2.69 percentage points, respectively; net interest rate was 17.99%, up 2.72 percentage points year on year. We believe that the significant increase in the company's net profit margin is mainly related to the sales product portfolio.

The payback situation is good. The company's accounts receivable at the end of the 1Q24 quarter were 573 million yuan and 751 million yuan at the end of the 4Q23 quarter, showing a significant decrease. At the same time, the company received 611 million yuan in cash from selling goods and providing labor services, which was significantly higher than the 373 million yuan in 1Q23 and 531 million yuan in 4Q23, showing a good repayment situation.

Investment advice: We have noticed that Ping Factory and the company Youshang all performed relatively well in this year's quarterly report but are confident for the whole year, so we are not revising our profit forecasts. Maintain a “buy” rating. In 2024-2026, the company is expected to achieve operating income of 43.21/60.96/8.512 billion yuan, an increase of 41.47%/41.10%/39.63%; net profit to mother of 9.13/13.38/1.954 billion yuan, an increase of 50.32%/46.59%/46.07% year-on-year.

Risk warning: The company's development falls short of expectations, and the development of AI falls short of expectations.