The company released its quarterly report for '24. Affected by adverse factors such as the downturn in the industry and the decline in newly started projects, the company's revenue declined year-on-year, and the high increase in management expenses affected profits. In the medium to long term, the company focuses on investing in innovative businesses such as new digital costs and construction business platforms, and maintains a “highly recommended” investment rating.
The company published its quarterly report for '24. 24Q1 achieved revenue of 1,286 billion yuan, a year-on-year decrease of 1.08%; net profit to mother of 6.0781 million yuan, a year-on-year decrease of 94.92%; net profit after deduction - 1.3873 million yuan, a year-on-year decrease of 101.48%. The 24Q1 company's net operating cash was 750 million yuan, up from 924 million yuan in the same period last year, mainly because the annual performance bonus had not been paid in the current period; the company's contract debt balance was 2.137 billion yuan during the reporting period, down 5.94% from the same period last year. The company achieved a gross profit margin of 87.58% in the first quarter, an increase of 0.97 percentage points over the same period last year, and gross margin remained stable.
The downturn in the construction industry affects revenue growth, and high management expenses affect profits. Affected by factors such as the slowdown in macroeconomic growth, the decline in real estate investment, and the decline in construction project starts, the investment intensity of downstream customers in the digital field has decreased. Combined with the company's organizational structure adjustments in 2023, it has affected the pace of the company's business development and led to a decrease in the company's revenue growth rate. During the reporting period, the company achieved sales/management/R&D expense ratios of 24.31%/32.35%/28.66%, respectively, with year-on-year changes of -1.39/10.64/-2.96 percentage points. Among them, the 24Q1 company's management expenses were 420 million yuan, an increase of 47.62% over the previous year, mainly due to the optimization of the company's organizational structure and the increase in separation compensation.
R&D investment continues to be high. Over the past few years, the company has continued to increase R&D investment and consolidate core technical barriers. From 2021 to 2024Q1, the company's R&D expenditure rates were 23.73%, 22.99%, 28.87%, and 28.66%, respectively, and R&D expenditure continued to remain high. In 2023, the company continued to upgrade its graphics core technology; released the construction industry's first digital core capability platform with independent intellectual property rights; developed its own AI model, and applied core AI technology to various fields such as architectural design, contract and procurement, construction, etc., to accelerate the intelligent transformation and value upgrading of the company's products.
Organizational structure upgrade to support the systematic digital needs of customers. In 2023, the company adjusted its organizational structure. The company broke down the original three BG organizations, established a transparent mesh organization of customer groups, product lines and business platforms, formed a business management system for customer groups, solutions, product lines, and platforms, promoted the upgrading of the company's internal organizational capabilities to systematization, platformization and networking, and provided customers with a complete solution service system based on the platform and components.
Maintain a “Highly Recommended” investment rating. The company's operating income from 24 to 26 was adjusted to 72.33, 82.16, and 9.474 billion yuan, and net profit to mother to 5.47, 9.26, and 1,106 billion yuan, corresponding PE was 31.5, 18.6, and 15.6 times, respectively, maintaining the “Highly Recommended” investment rating.
Risk warning: The number of new construction starts declined due to macroeconomic influence, and the progress of new business fell short of expectations.