Core views

The company continued to make steady progress, insisted on high-quality development, and further recovered its business performance. From January to September 2024, the company achieved operating income of 0.736 billion yuan, a year-on-year increase of 9.02%, and net profit to mother of 36.75 million yuan, an increase of 11.36% year-on-year. As of September 30, 2024, on-hand orders were 0.75 billion yuan, an increase of nearly 20% year-on-year, and reached a record high for the same period. Railway investment is picking up, 5G-R is progressing in an orderly manner, and the company's overall layout is expected to fully benefit. Actively expand the civil aviation business and lay out opportunities in fields such as civil aviation management and low-altitude economy. Continued deepening cooperation with Huawei will further benefit the development of the company's smart transportation business in domestic and foreign markets, especially overseas market opportunities in the context of technology going overseas.

occurrences

The company released its three-quarter report for 2024. From January to September 2024, the company achieved operating income of 7.3.6 billion yuan, a year-on-year increase of 9.02%, and net profit to mother of 36.75 million yuan, an increase of 11.36% over the previous year.

Brief review

1. Business performance recovered further, and on-hand orders reached a new high during the same period.

The company continued to make steady progress, insisted on high-quality development, and further recovered its business performance. From January to September 2024, the company achieved operating income of 0.736 billion yuan, a year-on-year increase of 9.02%, and net profit to mother of 36.75 million yuan, an increase of 11.36% year-on-year. The company has sufficient on-hand orders. As of September 30, 2024, on-hand orders were 0.75 billion yuan, an increase of nearly 20% over the previous year, and reached a record high for the same period.

In the third quarter of 2024, the company achieved revenue of 0.275 billion yuan, a year-on-year increase of 6.67%, and net profit to mother of 10.18 million yuan, an increase of 46.85% year-on-year.

From January to September 2024, the company's comprehensive gross profit margin was 41.71%, up 0.72 pcts year on year; sales, management and R&D expenses totaled 0.264 billion yuan, up 7.61% year on year, three rates were 35.86%, down 0.47 pcts year on year; net profit margin to mother was 4.99%, up 0.10 pcts year on year.

2. Railway investment is picking up, and 5G-R is progressing in an orderly manner.

From January to September 2024, China's railway completed fixed asset investment of 561.2 billion yuan, an increase of 10.3% over the previous year, and overall investment picked up.

5G-R related tests are progressing in an orderly manner as planned. The company has completed research and development of products and solutions related to command and dispatch based on 5G-R, and has laid out various products and solutions that enable the industry to be intelligent and digitized, which is expected to fully benefit 5G railway construction.

3. Actively promote cooperation with Huawei and is one of its partners in the field of intelligent transportation.

The company signed a “Strategic Cooperation Agreement” with Huawei in July this year to cooperate in the fields of communications and information technology. The company will rely on basic information technology and equipment such as Huawei operating systems (Hongmeng, Euler), servers (Kunpeng, Shengteng), 5G, cloud computing, and large models to develop intelligent products and solutions with high safety, high reliability, and high stability for vertical industries such as rail transit and civil aviation, and build a complete end-to-end capability system. Cooperation with Huawei will further facilitate the development of the company's smart transportation business in domestic and foreign markets, especially overseas market opportunities in the context of technology going overseas.

4. Actively expand the civil aviation business and lay out opportunities in the fields of civil aviation management and low-altitude economy.

In 2023, the company further focused on the field of civil aviation management and established Beijing Jiaxun Intelligent Aviation Technology Co., Ltd. based on the foundation of command and dispatch suppliers of independent domestic brands in the field of civil aviation. In September 2024, at the 2024 domestic voice switching system technology exhibition event for small and medium-sized airports in the central and southern regions, Jiaxun Intelligent Aviation, as one of the four domestic voice switching system manufacturers, showcased its technical achievements in the field of domestic voice switching system technology. The field of civil aviation is one of the company's important layout directions in the future. At the same time, the company is also actively introducing products and system solutions into strategic emerging industries such as the low-altitude economy, which is expected to become a new growth engine for the company in the future.

5. Profit prediction and investment advice.

The company continued to make steady progress, insisted on high-quality development, and further recovered its business performance. Railway investment is picking up, 5G-R is progressing in an orderly manner, and the company's overall layout is expected to fully benefit. Actively promoting cooperation with Huawei is one of its partners in the field of intelligent transportation. Cooperation with Huawei will further facilitate the development of the company's smart transportation business in domestic and foreign markets, especially overseas market opportunities in the context of technology going overseas. Actively expand the civil aviation business and lay out opportunities in fields such as civil aviation management and low-altitude economy. We expect the company's revenue from 2024 to 2026 to be 1.22 billion yuan, 1.43 billion yuan, and 1.71 billion yuan, and net profit to mother will be 0.08 billion yuan, 0.1 billion yuan, and 0.14 billion yuan respectively. The corresponding PE is 62x, 47x, and 35x, respectively, maintaining a “buy” rating.

6. Risk warning. Railway 5G-R construction falls short of expectations: At present, China has clearly developed a next-generation 5G communication system for railways. The Ministry of Industry and Information Technology has approved the 5GR test frequency to support the 5G-R system field technology test, but due to the need to complete many tasks in the early stages, there is a risk that the railway 5G-R construction progress and railway 5G-R construction scale will fall short of expectations. Investment in railway fixed assets and information technology falls short of expectations: Economic growth has decelerated in recent years due to factors such as the macroeconomic environment. Currently, the economy is expected to gradually recover under the stimulus of relevant fiscal and monetary policies, but there is a risk that future economic recovery will fall short of expectations, affecting investment in railway fixed assets and information technology falling short of expectations. There is a risk that the expansion of the civil aviation sector will fall short of expectations. The risk of increased competition in the industry.