Incident: The company recently released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, it achieved revenue of 431 million yuan, YoY +14.74%; net profit to mother of 45 million yuan, YoY +19.55%; gross profit margin of 41.73%, an increase of 2.04 pct over the previous year. 2024Q1 achieved revenue of 93 million yuan, YoY +11.97%; net profit to mother of 12 million yuan, YoY +35.80%; gross profit margin of 43.22%, up 4.28 pcts year-on-year. The company's overall performance achieved relatively rapid growth.

Comment: The mining business is growing rapidly, and the economic benefits are improving first. By product, in 2023, the company's mining product revenue was 402 million yuan, YoY +19.22%, gross profit margin decreased by 0.94 pct; revenue from environmental products was 12 million yuan, YoY -43.27%, gross profit margin 45.47%, up 45.05 pct year on year; other business revenue was 12 million yuan, YoY +20.94%, gross profit margin 51.99%, up 1.81 pct year on year. The promotion of mining industry policies and the improvement in the economic efficiency of coal companies have promoted good growth in the company's mining business. On the cost side, the company's sales/management/R&D expenses in 2023 were 0.67/0.24/0.35 million yuan respectively, YoY +5.81%/+8.86%/+3.00%, respectively. The cost control effect was obvious, and the economic efficiency improved significantly.

The large mine model completed verification work and obtained a scarce “satellite communication business license”. The company and the Shanghai Artificial Intelligence Research Institute jointly developed a large-scale mine model project. This is the industry's first innovative application research and development project. After AI is supported, the ability to detect, treat, and control hidden coal mine disasters will be significantly improved. It has now completed system architecture design, product prototype design and demonstration work, and will enter the product development stage. Furthermore, the company actively lays out the satellite Internet field. In May 2023, the participating subsidiary Zhiyu Xing obtained three scarce satellite communication business licenses for “very small aperture terminal earth station communication services,” “content distribution network services,” and “value-added telecommunication services in the field of Internet access services” issued by the Ministry of Industry and Information Technology, demonstrating market recognition and competitiveness, and developing satellite broadband communication equipment for drones and manned aircraft. Related products have been used in mining communications, maritime anti-trafficking, power grid inspection, and low-altitude economy.

Profit forecast: Meansson is a leading mining information technology enterprise in China. We are optimistic that the company will continue to benefit from the coal mine industry informatization construction with its core technical advantages, achieve breakthroughs in satellite Internet and other fields, and achieve rapid growth in performance. It is expected to achieve revenue of 563/733/954 million yuan in 2024-2026, and net profit of 0.61/0.82/107 million yuan, corresponding to EPS of 0.20/0.27/0.35 yuan. It is covered for the first time, giving it an “increase in wealth” rating.

Risk warning: The expansion of new application fields falls short of expectations, and the construction of coal mine informatization falls short of expectations.