Net profit growth rate of return to mother was impressive, maintaining a “buy” rating
The company achieved revenue of 490 million in '23, -14.1% year-on-year, and achieved net profit of 40 million yuan, +160.7% year-on-year, after deducting 20 million in non-net profit, turning a loss into a profit. 23Q4 achieved revenue of 140 million yuan in a single quarter, -5.9% year-on-year, net profit to mother of -0.02 million yuan, deducted non-net profit of 452,000 yuan, turning a loss into a profit. Revenue pressure was mainly due to the company broadening its customer base in the insurance and industrial sectors and shrinking real estate customer business. By the end of '23, central enterprises and government customers accounted for more than 59.78% of revenue, an increase of 5.58% over the same period last year; the sharp year-on-year increase in net profit was mainly due to an improvement in gross margin and a year-on-year decline in impairment.
24Q1 achieved revenue of 77 million yuan, -14% year over year, and net profit to mother of 03 million yuan, or -54% year over year, mainly due to the decline in Q1 gross margin. Considering the decline in real estate, we slightly lowered our profit forecast. We expect the company's net profit to be 0.7, 1.3, and 180 million yuan (the previous value was 0.8 million yuan and 150 million yuan in 24 and 25 years), corresponding to PE of 31, 17, and 12 times, maintaining the “buy” rating.
Revenue is under pressure, and gross margin is growing steadily
By business, the company's third party evaluation and project management achieved revenue of 320 million yuan and 170 million yuan respectively, -18.04% and -6.49% year-on-year, and gross margins of 44.42% and 31.17%, respectively, and +5.09pct and -1.32pct. The profitability of evaluation projects improved significantly. The company's overall gross margin in '23 was 39.7%, +2.62 pct year on year. The gross margins for 23Q4 and 24Q1 were 42.09% and 27.2% respectively, -4.47 pct and -8.36 pct year on year.
The overall fee control effect is good, and the cash flow performance is excellent
The cost rate for the 23-year period was 28.83%, or -1.65pct year on year. Among them, sales, management, R&D, and finance expenses were +1.75pct, -3.67pct, +0.30pct, and the year-on-year decrease in management expenses was mainly due to reduced equity incentive expenses, and asset and credit impairment losses decreased by 0.2 billion to 31 million year-on-year. The net interest rate under the combined impact was 8.60%, +5.84pct year on year. The net amount of CFO in '23 was 65 million, with a year-on-year increase of $109 million, and the payment/payout ratio was 105.78% and 35.36%, respectively, +9.04pct and +2.23pct, respectively. Cash flow improved markedly. Accounts receivable were 260 million yuan, a decrease of 60 million yuan compared to the beginning of the year, and contract assets increased by 15 million yuan year over year.
Build an “information+digitalization” platform and lay out overseas markets
The company has built a leading “information+digitalization” platform, established a “Ruijie database” covering actual measured quantities and risk assessments in more than 700 cities and more than 500,000 project segments across the country, developed an “insurance risk control service platform” that empowers information-based management and risk prediction of insurance business, and created a variety of “online+offline” and “manual+intelligent” digital platforms. At the same time, it also lays out overseas markets to carry out engineering evaluation and on-site project management services in Indonesia, Malaysia, Singapore, and the Democratic Republic of the Congo (DRC).
Risk warning: New business development progress falls short of expectations, real estate downside risk, market competition risk.