Core views
In 2023, the company's performance grew steadily against the backdrop of weak macroeconomic conditions, achieving operating income of 320 million yuan, up 19.52% year on year; achieving net profit of 574.77 million yuan, up 6.89% year on year; achieving net profit deducted from non-mother of 51.6947 million yuan, an increase of 92.72% year on year. As the company accelerates the expansion of the civilian market and CAE software continues to be released, we believe the company is expected to achieve high revenue growth in 2024. Based on the company's results for the first quarter of 2023 and 2024, we adjusted the profit forecast for 2024-2025 and added the 2026 forecast. The estimated revenue is 4,52/595/786 million yuan, up 41.21%/32.30%/31.28% year on year, and net profit to mother is 0.79/118/151 million yuan, up 37.17%/49.44%/28.14% year over year, corresponding to PE 70/47/36 times, maintaining the “buy” rating.
occurrences
The company publishes its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 320 million yuan, a year-on-year increase of 19.52%; achieved net profit of 574.77 million yuan, an increase of 6.89% over the previous year; achieved net profit of 51.6947 million yuan without return to mother, an increase of 92.72% over the previous year. The 24Q1 company achieved operating income of 318.642 million yuan, a year-on-year increase of 346.22%; realized net profit of 21.268 million yuan, a year-on-year change of -9.00%; net profit after deducting non-attributable net profit of 255.373 million yuan, a year-on-year change of -27.51%.
Brief review
24Q1 achieved high revenue growth and accelerated expansion of the civilian market. The 24Q1 company achieved revenue of 31.6842 million yuan, an increase of 346.22% over the previous year, mainly due to delays in confirmation of some orders in '23 until 24Q1. The company achieved net profit of 21.268 million yuan, a year-on-year change of -9.00%, deducted non-net profit of 255.373 million yuan, a year-on-year change of -27.51%. The main reason was that the company increased investment in R&D, and R&D expenses increased 71.81% year on year. In 2023, the company acquired Guangzhou Yangpu Intelligent Information System Technology Co., Ltd., which occupies a certain share of the CAE, PLM and MES markets, which is expected to help the company accelerate the expansion of the civilian sector.
The CAE software business scale is growing, and the integration of AI models and CAE is being promoted. In 2023, the company's engineering simulation software business achieved revenue of 188 million yuan, an increase of 39.37% over the previous year, and simulation product development achieved revenue of 131 million yuan, a year-on-year decrease of 1.78%. The increase in the scale of the CAE software business led to an increase in the company's overall gross margin. The gross margin of the company's main business in 2023 was 69.64%. In the field of simulation product development, the company focuses on technological hot spots, forwardly combines AI and CAE, deepens CAE engine innovation, and carries out AI-based generative digital twin exploration.
Laying out the robotics business is expected to bring new momentum to revenue growth. In February 2024, the company established a robotics division. It plans to provide industrial enterprise customers with software and hardware tools and integrated solutions for the design, development, testing and verification process of humanoid robots and related products to help downstream enterprises improve the level of innovation and design quality of robots. In March 2024, the company launched a high-performance six-dimensional force and torque sensor, which can meet the needs of humanoid robots to measure forces such as fingertips, wrists, and ankles. We believe that the company's active deployment of the robotics business is expected to bring new momentum for revenue growth.
Investment advice: The company accelerates the expansion of the civilian market and forwardly combines AI and CAE. It is expected that the CAE software business will accelerate in volume, which in turn will drive the company's business to achieve high growth. The company actively lays out the robotics industry, which is expected to bring new momentum for revenue growth. Based on the company's results for the first quarter of 2023 and 2024, we adjusted the profit forecast for 2024-2025 and added the 2026 forecast. The estimated revenue is 4.52/595/786 million yuan, up 41.21%/32.30%/31.28% year on year, and net profit to mother is 0.79/118/151 million yuan, up 37.17%/49.44%/28.14% year over year, corresponding to PE 70/47/36 times, maintaining the “buy” rating.
Risk analysis
(1) Risk of macroeconomic fluctuations: As a downstream customer of the company, if macroeconomic fluctuations intensify in the future, it may cause further weakness in customer demand for informatization and R&D and design software, which will adversely affect the company's business development; (2) Business development risk: the company's downstream customers are mainly concentrated in the military sector. If the company's military customer procurement budget drops drastically or the company fails to maintain cooperative relationships with major customers, it will have a significant adverse impact on the company's performance; (3) CAE product iteration falls short of expectations: CAE software technology threshold is high and involved Research and development is very difficult. If the company's product development and technology upgrade do not meet industry trends, cannot meet market demand, R&D results do not meet expectations or even R&D failure, it may not be able to continue to maintain a high level of market competitiveness, lose market share, and adversely affect future business development.