The company is vigorously developing a group ecosystem, expanding the vertical application companies and gradually transforming from a single remote sensing enterprise to a group enterprise, laying out the entire ecosystem of the industry.

Compared with data from December 31, 2022 and June 30, 2024, Zhongke Xingtu's investment balance in joint ventures dropped from 39.74 million to 27.18 million. However, the subsidiary's investment balance rose from 11.17 to 2.24 billion yuan, an increase of 200%.

From a technical perspective, the application of remote sensing data plays an indispensable role in the fields of government departments to personal apps and drones, and can rely on its technical characteristics to penetrate different scenarios.

From an industry perspective, the company's remote sensing segment accounts for a relatively small share of the overall geographic information market, while the downstream application market has great potential. Comparing companies in the same industry, we found that the company's strategy provides certain support for the revenue, net profit, and cash flow growth rate of listed companies when the growth rate of the main business declines, bringing resistance to cycles and risks.

Focus on some or high-yielding subsidiaries

As of June 30, 2024, the company has set up 17 subsidiaries in different industries or regions. Among them, the companies have already been listed in the 3rd edition: Weitianxin (meteorological and marine business entity) and star map measurement and control (space survey and operation control platform business entity).

In addition, Starmap Earth (Hefei), which is mainly responsible for online business, has reached 0.022 billion yuan in revenue in 2024, exceeding the revenue for the full year of 2023. The main business of Zhongke Starlight (formerly Shanghai Guanggu Electronics) is millimeter microwave equipment for the special industry. The revenue in 23 years has reached 0.198 billion, and the net profit is 49.85 million. The company's joint venture, Beidou Fuxi, relies on the core technology Beidou grid code to develop low-altitude related businesses. It can calculate that the winning bid amount exceeds 20 million in 24 years, which is higher than the bid amount of about 7 million won for the whole of '23.

Investment advice

We expect the company to achieve revenue of 36.72/5.216/6.983 billion yuan in 2024-2026, with a year-on-year increase of 45.9%/42.1%/33.9%; net profit to mother of 0.466/0.639/0.864 billion yuan, an increase of 36.1%/37.0%/35.3% year-on-year, maintaining a “buy” rating.

Risk warning

1) R&D implementation falls short of expectations; 2) Policy incentives fall short of expectations; 3) Downstream demand falls short of expectations.