Summary of the announcement: Ningbo Yoda Investment Partnership (Limited Partnership), the controlling shareholder and actual controller of the company, plans to increase its holdings of the company's shares within 6 months from the date of announcement (no increase during the window period), and plans to increase the total amount of holdings by 1.

200-200 million yuan.

The increase in holdings shows confidence in long-term development, and performance continues to expand steadily. Zhao Yanping, the controlling shareholder, actual controller and chairman of the company, recently completed a plan to increase his holdings by a total of 1,417,300 shares, accounting for 0.26% of the total share capital. This time, he has increased his holdings again through concerted action, fully demonstrating his confidence and value recognition in the company's future development prospects and strategic plans, which is conducive to promoting the company's sustainable, stable and healthy development. The company's revenue and profit scale has expanded steadily in recent years. Revenue in 2023 was 2,678 billion yuan, up 19.77% year on year, and net profit to mother increased 24.32% year on year. 2015-2023 revenue and net profit CAGR were 28.4% and 30.7% respectively. Benefiting from comprehensive cost reduction strategies such as procurement and R&D, gross margin increased overall, and increased 1.13 pct to 57.8% year on year in 2023. Expense control was stable during the period, and profitability was further enhanced. 2024Q1 continued its growth trend. The year-on-year growth rate of revenue and net profit to mother was 20.53% and 30.35%, respectively. The target net profit for resources and utilities and overseas regions grew rapidly. The target net profit for the whole year was 550 million yuan, an increase of about 25% over the previous year. The scale of performance is expected to benefit from accelerated application and market expansion.

Overseas markets are expanding rapidly, and the low-altitude economy is contributing new momentum. The company's overseas revenue in 2023 was 720 million yuan, up 47.51% year on year, accounting for 26.85% of revenue, and a gross profit margin of 72.67%, which is significantly higher than 52.3% of the domestic market. Overseas products continue to be abundant, RTK products continue to grow, agricultural machinery autonomous driving products are rapidly expanding, and various product lines such as 3D intelligence, marine surveying and mapping, and digital construction have all gone overseas and are developing well. Overseas markets have broad prospects, and the company is expected to further increase its global market share with its leading position experience and cost-effective advantages in the domestic market. The company actively lays out emerging scenarios. Revenue in the robotics and autonomous driving sector increased 61.6% year-on-year in 2023, and some designated passenger car models were shipped in batches. With mass production and delivery of new models such as the Xiaomi SU7 in 2024, the business is expected to continue to grow at a high rate. In terms of low-altitude economy, the company's 3D intelligent products, mainly products such as drones and lidars, can be used in smart city space digital platform construction, emergency monitoring, power inspection, etc., and the intelligent acquisition of spatial data required in land surveys, smart cities, etc., and can also provide comprehensive solutions such as navigation and positioning modules and high-precision account services for low-altitude work terminals. In addition, the company has a drone flight academy with all models and all levels of training qualifications. Currently, more than 10,000 qualified drivers have been trained and transported.

Increase investment in R&D and build core technical barriers. With high-precision positioning technology as the core, the company has formed core algorithm capabilities with technical barriers. It has complete algorithm technical capabilities such as high-precision GNSS algorithms, 3D point clouds and aerial surveying, GNSS signal processing and chipization, autonomous driving sensing and decision control, and has gradually built and perfected a high-precision positioning technology platform and a global satellite and earth integrated network service platform. The focus is on laying out core basic components such as GNSS chips, OEM boards, antennas, etc., to further enhance core technical advantages such as high-precision GNSS algorithms, integrated navigation, SWAS wide area enhancement, and precise tracking. The high-precision GNSS baseband chip “Xuanji” has been developed and mass-produced for use in some products. The next generation of high-precision positioning chips is being developed. Through the construction of a domestic high-density reference station network with CORS service algorithms, the S is mainly used in the fields of intelligent measurement, surveying and mapping equipment, autonomous driving of agricultural machinery, position monitoring, etc. Gradually expanding to various outdoor robots and other scenarios, it is expected to bring continuous revenue contributions. At the same time, it continues to invest in high-precision lidar, integrated navigation, SLAM, unmanned flight control and other related technologies to independently develop and break through long-range lidar core technology, realize the deep integration of high-precision lidar and visible light cameras into 3D modeling, and provide new solutions for multi-source geographic information data collection and output results, which is conducive to enhancing the competitiveness of 3D intelligent products and benefiting from the development trends of low-altitude economy and offshore industries.

Investment advice: Huazu Navigation is a leading high-precision navigation and positioning leader. It provides customers with hardware equipment and solutions for different scenarios, masters core algorithms, realizes self-development and self-sufficiency in upstream core infrastructure devices, and gradually develops new business models such as SaaS subscription services, which is expected to improve profitability. As the demand for high-precision positioning in traditional industries escalates, emerging scenarios such as automotive and low-altitude economy expand smoothly. Combined with opportunities to go overseas, incremental space will be further opened up. We expect the company's net profit for 2024-2026 to be 576 million yuan/763 million/941 million yuan, respectively, and EPS of 1.06 yuan/1.40 yuan/1.73 yuan respectively, maintaining the “buy” rating.

Risk warning: Downstream application demand falls short of expectations; risk of increased industry competition; risk of technology iteration; risk of deviation in industry size measurement; risk of exchange rate fluctuations; risk of information delays or untimely updates of public data used in research reports.