Incident BL: On April 24, 2024, the company released its 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 of 0.254 billion yuan, a year-on-year increase of 1.98%; net profit after deducting non-attributable net profit of 0.186 billion yuan, a year-on-year decrease of 17.27%. In the first quarter of 2024, the company achieved revenue of 0.54 billion yuan, up 4.51% year on year; net profit to mother 0.02 billion yuan, up 216.45% year on year; net profit after deducting non-return to mother 0.018 billion yuan, up 194.39% year on year.

The performance fell short of market expectations.

Key points of investment

Order growth gradually recovered, and overall revenue remained flat: 2023 orders increased 8.7% year over year.

Traditional markets with developed economies, such as East China and South China, are still recovering. The growth rate of the northern and southwestern markets is remarkable. Orders from the northern region increased 34% year-on-year, and orders from the southwest region increased 171% year-on-year; in terms of the industry market, customer orders in the new energy sector increased 137% year over year.

In 2023, the company achieved revenue of 2.254 billion yuan, a year-on-year decrease of 0.75%. Among them, the pan-ERP business achieved revenue of 1.219 billion yuan, a year-on-year decrease of 1.70%; the intelligent manufacturing sector achieved revenue of 0.83 billion yuan, an increase of 2.56% over the previous year.

Actively lay out AI products, and R&D investment continues to increase: In 2023, the company released the AIGC platform, a major manufacturing service model, and became one of the first partners of Huawei's “Pangu Big Model”. The company invests in R&D resources for intelligent and automated industrial AI products in the manufacturing industry in terms of process design. This product is expected to be fully adapted to the commercial release of localized AI computing power platforms in the new fiscal year. In 2023, the company's R&D expenses reached 0.32 billion yuan, a year-on-year increase of 19.49%.

The central country's enterprise business is expanding steadily: In 2023, the company's self-developed platform successfully replaced some mainstream ERP application modules of 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. The company strives to increase its market share by entering the customer circle of central enterprises and the customer circle of medium and large private enterprises through the boom of relying on domestic software replacement.

Profit forecasting and investment ratings: The company actively lays out AI and central state-owned enterprises, cooperates deeply with Huawei, continuously launches new products, and gradually improves the competitiveness of the industry. We believe that with the gradual and steady recovery of downstream prosperity, the company's revenue is expected to return to high growth. However, due to the low manufacturing boom in 2023, we lowered the 2024-2025 net profit forecast value from 0.382/0.497 billion yuan to 0.306/0.366 billion yuan, and added the 2026 net profit forecast to 0.427 billion yuan. Maintain a “buy” rating.

Risk warning: The recovery in the manufacturing industry fell short of expectations; the development of AI technology fell short of expectations; industry competition intensified.