Leading the way in intelligent manufacturing, maintaining a “buy” rating

The company is a leading enterprise in the domestic industrial Internet, intelligent manufacturing, core ERP, etc., and is expected to benefit from Huawei MetaERP promotion opportunities. We maintain the original profit forecast and add the 2026 profit forecast. We expect net profit to be 3.20, 3.96, and 494 million yuan for 2024-2026, EPS is 0.78, 0.97, and 1.21 yuan/share. The current stock price corresponds to PE of 21.0, 16.9, 13.6 times, maintaining a “buy” rating.

Event: Company Releases 2023 Annual Report and 2024 Quarterly Report

In 2023, the company achieved revenue of 2,254 billion yuan, a year-on-year decrease of 0.75%; net profit to mother was 254 million yuan, an increase of 1.98% over the previous year. In the first quarter of 2024, the company achieved operating income of 540 million yuan, an increase of 4.51% year on year; realized net profit of 20 million yuan to mother, an increase of 216.45% year on year.

Short-term performance is under pressure, and industry and regional market development is progressing positively, which is good for future results. The Pan-ERP sector achieved revenue of 1,219 billion yuan in 2023, a year-on-year decrease of 1.70%; the intelligent manufacturing sector achieved revenue of 830 million yuan, an increase of 2.56% over the previous year. The pressure on performance is mainly affected by the slowdown in digital investment from individual major customers, the slowdown in the pace of acceptance confirmation of some projects, an increase in inventory, and an increase in sales expenses due to increased sales market activity. Orders in 2023 increased 8.7% year on year. The company actively explores incremental markets from both industry and regional dimensions. Among them, the northern and southwest markets grew significantly. Orders from the northern region increased 34% year over year, orders from the southwest region increased 171% year on year; customer orders in the new energy sector increased 137% year on year. More than 230 new customers were added throughout the year, accounting for 21.66% of the total number of customers, laying a good foundation for continued market expansion in the future.

MetaERP core partner, mass promotion is worth looking forward to

On April 20, Huawei announced the successful development of autonomous and controlled MetaERP and held the “Heroes Crossing the Dadu River” MetaERP Commendation Conference. The company attended the Pledge Conference as a core partner of Huawei MetaERP and received commendations. According to the 2023 annual report, the company's self-developed platform successfully replaced some mainstream ERP application modules from central enterprises abroad, and was switched online on a large scale during the year, proving that the platform was recognized by the industry in terms of safety, stability and reliability. We are optimistic about the company's technology accumulation and cooperation with Huawei, which is expected to open up a new growth curve in the central state-owned enterprise market.

Risk warning: MetaERP promotion falls short of expectations; market competition intensifies; company R&D falls short of expectations, etc.