Incidents:

The company announced the 2024Q3 results report. According to the company announcement, the company achieved revenue of 2.007 billion yuan in 2024Q1-Q3, a year-on-year increase of 43.44%, and achieved net profit of 0.146 billion yuan, a year-on-year increase of 41.27%; the 2024 single Q3 achieved revenue of 0.903 billion yuan, an increase of 33.29% year-on-year, and achieved net profit of 0.082 billion yuan, a year-on-year increase of 21.07%. The company's performance is in line with market expectations.

Comment:

Q3 Revenue reached a record high for the same period, and is expected to continue to increase throughout the year. According to the company announcement, 2024Q1/Q2/Q3 revenue was 0.419/0.686/0.909 billion yuan respectively, with year-on-year growth rates of 56.44%/50.93%/33.29%, respectively. According to our analysis, the company's revenue continued to rise. Q3 revenue reached a record high during the same period, mainly due to the accelerated release of demand in various fields, and the continuous increase in on-hand orders led to high revenue growth. Considering that the company's downstream customers are mainly special and government enterprise customers, and customer orders are usually concentrated in the fourth quarter, the company's orders and revenue may continue to increase in the fourth quarter, and revenue is expected to continue to increase throughout the year.

Accumulate large impairment losses and increase repayment efforts to ensure long-term high-quality growth. According to the company announcement, gross margin for 2024Q1-Q3 was 47.49%, down 1.31 pcts from the same period last year, 46.86%, up 1.12 pcts from the same period last year; 2024Q1-Q3 net margin was 11.44%, down 0.46 pcts from the same period last year, and 13.58% for single Q3, down 1.40 pcts from the same period last year. According to our analysis, 1) Due to product restructuring, overall gross margin declined slightly, and is expected to remain stable in the future as the scale effect increases. 2) Affected by large impairment losses, the net interest rate declined. The company calculated a credit impairment loss of 0.118 billion yuan in the first three quarters, compared to 0.066 billion yuan in the same period last year. The overall cost ratio remained stable during the first three quarters. It was 33.28% in the first three quarters, an increase of 0.02 pcts over the same period last year. We believe that as the company continues to strengthen accounts receivable management and continuously optimize internal control capabilities, future performance is expected to maintain high-quality growth.

The core enterprise of aerospace informatization, has four major highlights to help the company grow rapidly. 1) The company is a domestic digital Earth national team and is deeply involved in special fields. Defense informatization is expected to accelerate in the late 14th Five-Year Plan period, and demand in special fields may exceed expectations; 2) The company vigorously develops digital Earth online business to build a domestic remote sensing application ecosystem, and the second growth curve accelerates growth; 3) Continue to improve the industrial chain layout and build its own satellite constellation in the future to help the company's long-term development. 4) Group horse racing strategies are becoming more and more perfect, and capitalized operations of subsidiaries such as Starmap Measurement and Control and Starmap Weitianxin are accelerating, and Beidou Fuxi is expected to fully benefit from the development of the domestic low-altitude economy.

The 2024-2026E profit forecast was lowered and the “Buy” rating was maintained. Considering the impact of the company's increased investment in civil market expansion, compounding the impact of accounts receivable credit impairment losses, we lowered the company's 2024-2026E annual net profit forecast to 0.481/0.679/0.95 billion yuan (previous value was 0.484/0.681/0.971 billion yuan). The current stock price corresponding PE is 46/32/23 times, respectively. Considering that the company is a core enterprise in the field of remote sensing applications in China, the first growth curve continues to increase. The online business on the second growth curve is expected to increase. Achieved rapid growth and therefore maintained a “buy” rating.

Risk warning: Product delivery falls short of expectations; market competition increases risk; online business market expansion falls short of expectations.