Incidents:
The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue/net profit attributable to mother/net profit after deduction of $14.2/1.6/120 million yuan respectively in '23, +15.8%/+1.1%/+58.6% over the same period last year. 24Q1 The company achieved revenue/net profit attributable to mothers/net profit after deduction of non-net profit of 2.3 billion yuan, respectively, and increased or decreased losses by -2.3% /loss compared to the same period last year.
Comment:
Big data software and smart transportation business volume and profit increased in 23, becoming the company's largest source of revenue: the company's big data software and smart transportation/engineering design and inspection/planning consulting services achieved revenue of 5.8/3.3/51 billion yuan in '23, +60.7%/+0.1% year-on-year, gross margin of 27.2%/42.7%/45.6%, up 4.7/3.4/1.6pcts. Within 23 years, the company successfully implemented a number of benchmark projects such as BIM modeling, smart traffic engineering, and signal timing, and successfully replicated at smart high speed, further enhancing the competitiveness of big data software and smart transportation services. The share of big data software and smart transportation business revenue in total revenue increased by 11.4 pcts to 40.8% in '23, making it the business segment that contributed the most to the company's revenue. As China's smart transportation continues to advance, the company's big data software and smart transportation business are expected to continue to increase both volume and profit, effectively supporting the company's performance growth.
Net operating cash flow was positive in '23, and losses increased year-on-year due to declining gross margin in 24Q1: the company's gross sales margin/net margin in '23 was 37.4%/12.3%, +0.98/ -1.2pcts year-on-year. The cost rate for the 23-year period decreased by 3.6 pct to 22.0% compared to the same period last year, and the sales/management/finance/R&D expenses ratio was 2.6%/10.3%/-0.2%/9.2%, a decrease of 0.4/1.9/0.4/1.0 pct. The company's net operating cash flow in '23 was 125 million yuan. The net operating cash flow was positive, and the inflow was 140 million yuan higher than the same period last year. The decline in net investment income and the increase in credit impairment losses have somewhat dragged down the company's performance growth rate. The company's net investment gain/credit impairment loss in '23 was 0.17/ -0.72 billion yuan, -66%/+63.6% over the same period last year. Or due to the slow pace of resumption of work in '24 and the low funding rate for engineering projects, the company's 24Q1 revenue declined year-on-year, and the comprehensive gross margin fell 4.6 pcts to 9.5%. Net operating cash flow for 24Q1 was -230 million yuan, an increase of 53 million yuan over the same period last year.
Forward-looking layout of the low-altitude economy and building new business growth points: The company is the core technical unit of Shenzhen's low-altitude economy. It can provide consulting covering the whole process of low-altitude economic planning, policy, industry, software and hardware design and integrated delivery. It has participated in the preparation of Shenzhen's low-altitude economic development regulations and implementation plans, etc., undertook the country's first low-altitude intelligent integrated infrastructure construction project in 23 years, and actively served the development of the low-altitude economy in various regions of Shenzhen. As the low-altitude economy continues to heat up, the company is expected to rely on its forward-looking layout and strong competitive strength to obtain more orders and build new business growth points.
Profit forecasting, valuation and ratings: Considering local financial pressure, project progress and payments are sluggish, and the company's design consulting business may continue to be under pressure. We lowered the company's 24/25 net profit forecast to 177.209 million yuan (27%/35% reduction); the net profit forecast for the additional 26 years was 254 million yuan. The company's forward-looking layout is expected to obtain more orders to support continued growth in performance and maintain the company's “gain” rating.
Risk warning: Implementation of subsequent policies fell short of expectations, and the epidemic was repeated.