Report summary

Event: The company released its annual performance report and achieved revenue of 1,979 billion yuan (+24.00%) in 2023. Net profit attributable to mother was 152 million yuan, after deducting non-net profit of 111 million yuan, turning a year-on-year loss into a profit. Net cash flow from operating activities was $55.6443 million, compared to -116 million yuan in the same period last year, a significant improvement.

There have been breakthroughs in market development, and on-hand contracts have grown.

During the reporting period, the company strengthened its business development, achieved market breakthroughs, and the revenue growth rate returned to rapid growth. As a domestic GIS software benchmark company, the company signed a new Xinchuang contract amount to a new high throughout the year, with a year-on-year increase of more than 100%. In the field of natural resources, market leadership has been further consolidated in 14 major provinces including Jiangsu, Anhui, and Hebei. In the housing and construction sector, it has incubated a series of digital housing services such as digital housing management, a real estate big data monitoring platform, and an integrated housing security information platform, and participated in the construction of digital housing projects in dozens of cities including Wenzhou, Qingdao, and Shenzhen. The water conservancy sector surpassed more provincial customers, and the number of new contracts signed increased by about 25% over the same period last year. In the field of enterprise applications, with spatial intelligence (GI) + digital twin technology as the core, it serves the digital transformation of various customers at all levels, and the number of new contracts signed increased by about 150% over the same period last year. In the field of data elements, it participated in big data projects in dozens of cities including Shanghai, Hangzhou, and Xi'an. The smart Xianning spatio-temporal big data platform construction pilot project passed the inspection by a national expert group. Overseas markets have achieved permanent employees in more than 20 countries, distribution agents in more than 50 countries, and market customers in more than 100 countries.

Gross profit margin reached a new high in the past five years, and profitability may have recovered steadily.

On the profit side, gross sales margin was 57.88% (+11.34%), a record high in recent years. Management and R&D expenses increased slightly year-on-year, and investment in market expansion was significant, resulting in sales expenses of 377 million yuan (+34.43%). The actual R&D investment was 383 million yuan (+23.00%, including capitalized R&D expenditure of 121 million yuan), which is comparable to the revenue growth rate, accounting for 19.37% of revenue. On the asset side, the profits of the subsidiaries Shanghai Shuhui and Beijing Antu fell short of expectations. They calculated impairment losses of goodwill based on prudential principles, involving an amount of 1.59 million yuan; accounts receivable that are over 3 years old have increased dramatically, and the full amount of bad debt losses is about 37 million yuan. On the cash flow side, a net operating cash flow of 55.6443 million yuan (+ 148.08%) was achieved. The company increased its repayment efforts, and the overall repayment situation reversed the year-on-year trend. We believe that the company's continuous high-intensity R&D investment has driven the increase in product strength, driving gross sales margin to a new high in recent years. Sales expenses were heavily invested in the short term, compounded by phased goodwill, bad debt accruals, etc., which greatly disrupted the achievement of current net profit. It is expected that in the future, as the company's revenue scale recovers rapidly, its profitability will also be steadily restored.

It is actively developing a low-altitude economy, and has already launched a strategic cooperation with Taizhou Digital Production Group.

Domestic GIS basic software technology can be applied to fields such as low-altitude economic infrastructure construction, low-altitude airspace management and construction, low-altitude economic sensing and data processing, and low air weather monitoring. There are many scenarios that can be implemented on both the government side and the enterprise side. According to the company's March 21 announcement, Chaotu Software recently reached a strategic cooperation with Taizhou Data Industry Group. The cooperation between the two sides on low-altitude economic perception is one of the important elements of this strategic cooperation. The Digital Production Group has obtained a license to operate in local airspace and owns drone facility assets. The supermap software intelligently processes data collected by drones, constructs application scenarios, and provides services to various government offices. The two sides have cooperated to promote low-altitude economic operation issues. Chaotu Software has built a city-level drone service platform for the Digital Production Group. This cooperation is a useful experiment in the company's low-altitude economy business model. In the future, the company will further accumulate and optimize relevant technical capabilities, expand and deepen various practical application scenarios, and strengthen the service level of the urban low-altitude economy. The company will expand new urban low-altitude application scenarios, plan a new blueprint for low-altitude sensing, continuously promote the implementation of “Low Altitude Economy +” application scenarios in tourism, logistics, urban management, transportation, etc., and seize the new high ground of the low-altitude economy.

Investment advice

There have been breakthroughs in market development, gross margin has reached a new high in nearly five years, and the company's profitability may recover steadily in the future. At the same time, focus on the application of its large model technology entering the implementation period and the amount of new business that the low-altitude economy may bring. The company's revenue for 2024-2026 is estimated to be 2,391, 29.13, and 3.67 billion yuan, respectively, and net profit to mother is 2.67, 3.98, and 478 million yuan, respectively. Corresponding to the current PE is 30X /20X /17X, respectively, maintaining a “buy” rating.

Risk warning

Downstream demand falls short of expectations; technology iteration accelerates; market competition intensifies.