The 2023 results were in line with our expectations, and the 1Q24 results were slightly lower than our expectations. The company announced its 2023 results: revenue of 828 million yuan, +37.7% year over year; net profit to mother of 61 million yuan, +874.4% year over year; net profit after deducting non-return to mother - 78 million yuan, loss increased year-on-year. Among them, 4Q23 revenue was 362 million yuan, +44.2% year on year; net profit attributable to mother was 57 million yuan, +126.0% year on year; net profit after deduction of non-return to mother was 0.09 million yuan, which changed from profit to loss year over year. The company's 2023 results are generally consistent with previous reports and are in line with our expectations.
Simultaneously announced 1Q24 results: revenue of 120 million yuan, +3.8% year on year; net profit to mother of -0.26 million yuan, net profit of non-return to mother -78 million yuan, all of which increased year-on-year losses. 1Q24 The recovery of the company's domestic education market was slower than expected, leading to pressure on the overall revenue side, and the performance was slightly lower than our expectations.
Development trends
The endogenous business grew steadily in 2023, and the blog surpassed revenue expansion. By business segment, the company's 3D CAD revenue in 2023 was 188 million yuan (+16.3% YoY), of which ZW3D/Education sector 3D products were +28.4%/-5.9% YoY; 2D CAD revenue was 472 million yuan (+16.5% YoY), of which ZWCAD/Education sector 2D products were +33.5%/-17.7%, respectively. By market, in 2023, the company's domestic commercial market achieved steady growth due to improved product performance and service efficiency under the overall decline in customer software procurement budgets; the domestic education market experienced a year-on-year decline in revenue due to financial pressure and changes in the bidding process; and the overseas market achieved revenue of 157 million yuan (+71.1% year over year) due to localized layout and overseas brand building. The 2023 Beijing Bochao consolidated revenue of 96 million yuan and turned a loss into a profit. 1Q24 We expect the company's domestic commercial market to maintain steady growth, and the overseas market to continue to grow at a high rate of about 50%. The domestic education market will be affected by school financial expenses or a further decline in revenue, which will drag down overall revenue growth.
We expect 21% year-over-year revenue growth in 24 years. 1) Overseas business: We expect that with the launch of the company's overseas subsidiaries and continuous optimization of distributors, the overseas business is expected to continue 40% year-on-year revenue growth in 24; 2) Domestic commercial market: We expect the annual revenue growth rate of 3D CAD to exceed 2D with the company's new 3D version promotion and KA customer expansion, driving the domestic commercial market to achieve a year-on-year revenue increase of about 20%; 3) Domestic education market revenue is expected to resume positive growth under a low base. We expect overall revenue to grow at a steady rate of around 21% year over year in '24.
Profit forecasting and valuation
Considering that downstream demand recovered more slowly than expected, 2024/2025 revenue was reduced by 8.3%/12.1% to $9.98/1,225 million yuan; considering the company's continued investment in sales and R&D, profit for 2024/2025 was reduced by 59.1%/59.3% to RMB 0.60/111 million yuan. Considering that the company's short-term investment remains high and that it will still take time to release profits, we switched the valuation to 11.7x 2024e P/S and kept the target price of 96.3 yuan unchanged. The target price has 15.1% upside compared to the current price. The current price corresponds to 10.2x/8.3x2024e/2025e P/S. Maintain outperforming industry ratings.
risks
The manufacturing boom fell short of expectations; mergers and acquisitions fell short of expectations; and the implementation of the Goku platform fell short of expectations.