Incident: On April 23, 2024, the company released its 2024 quarterly report. In Q1 2024, the company achieved revenue of 3.391 billion yuan, up 34.44% year on year; net profit to mother was 590 million yuan, up 18.19% year on year; net profit after deducting non-return to mother was 586 million yuan, up 20.31% year on year. The results exceeded market expectations.
Key points of investment
Operating cash flow performance was good, and gross margin continued to be steady: in Q1 2024, the company's net operating cash flow was 470 million yuan, up 24.67% year on year; the company's gross margin was 32.68%. In Q1 2024, the company's R&D expense ratio was 9.45%, a year-on-year decrease of 3.44pct; the sales expense ratio was 1.86%, a year-on-year decrease of 0.36pct; and the management expense ratio was 2.87%, a year-on-year decrease of 1.38pct.
Guangxi Hongwang signed a contract to speed up localization of automation products: On the morning of March 27, 2024, Baoxin Software and Guangxi Hongwang 1550 cold rolling turnkey project signing ceremony was successfully held. The project will use Baoxin Software's latest full-stack localized PLC products and a new DSF (Digital Shop Floor) overall solution for automated digital industrial sites. It is expected to be officially put into operation in March 2025. The 1550 cold rolling project signed this time has a design capacity of 1.5 million tons/year, and the contract amount is about 700 million yuan. Subsequent plans will result in a scale of 10 million tons/year.
Accelerate the robotics business layout: At the 2024 Hanover Industrial Fair in Germany, Baoxin Turing robots debuted on the international stage, emphasizing their strategy of being rooted in Baowu and serving the world. Turing Robotics showcased a variety of new industrial robot solutions, 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.
Profit forecast and investment rating: Baoxin is a leader in information technology in the steel industry. As the localization of automation equipment in the steel industry accelerates and the penetration rate of robots increases, the company is expected to usher in accelerated development. However, due to the short-term impact of the steel industry boom, we lowered the net profit forecast value for 2024-2025 from RMB 35.62/4.272 billion to RMB 30.62/37.82 billion yuan, and added the 2026 net profit forecast to RMB 4.851 billion. Maintain a “buy” rating.
Risk warning: The progress of self-developed products falls short of expectations; the prosperity of the steel industry falls short of expectations.