Matters:
On February 27, the company released the 2023 performance report: the company's revenue in 2023 was 120 million yuan, down 13.95% year on year; net profit to mother was 183.18,600 yuan, down 52.51% year on year; non-net profit deducted from mother was 10.8066 million yuan, down 53.87% year on year.
Commentary:
Performance was under pressure in the short term, and profits were reduced by revenue restructuring. Net profit returned to mother in 2023 was 183.18,600 yuan, down 52.51% year on year. It was mainly affected by the decline in operating income, the adjustment of revenue structure, that is, the increase in the share of technical services revenue with lower gross margin. Overall gross margin declined. At the same time, government subsidies received decreased compared to 2022, and investment losses from investment participating companies increased.
Investment in power grids continues to increase, helping the development of power information security. In 2023, the cumulative average utilization of power generation equipment in power plants of 6000 kilowatts and above nationwide was 3,592 hours, a decrease of 101 hours over the same period last year. Major power generation companies completed investment of 967.5 billion yuan in power projects, an increase of 30.1% over the previous year. The power grid project completed an investment of 5275 billion yuan, an increase of 5.4% over the previous year. As the construction of new power systems progresses, it is expected to drive demand for grid informatization products, and the company is expected to benefit as a leading information security enterprise on the power distribution side.
Build an artificial intelligence security system and promote the implementation of the industrial Internet. Based on big data machine learning, the company monitors and analyzes the network behavior of devices in the smart energy Internet, implements equipment management, message notifications and rule settings to achieve complex energy management of accurate, intelligent, secure and reliable energy Internet networks, and builds a “network security management system based on zero trust.” In February of this year, the subsidiary Sichuan Weide Digital Research and Nationwide Production “Digital Platform for Distribution Network Engineering Based on Model Online Design Support” was officially released. The system uses advanced digital model technology such as cloud computing, big data, multi-modal generation, and artificial intelligence to provide a new and efficient solution for distribution network engineering and promote the implementation of artificial intelligence in the industrial Internet.
Investment advice: Considering the decline in performance in 2023, we adjusted our profit forecast. We expect revenue for 2023-2025 to be 1.20, 1.75, and 236 million yuan, respectively; net profit to mother of 0.18, 0.39, and 58 million yuan; and EPS of 0.22, 0.46, and 0.70 yuan. In terms of valuation, with reference to comparable companies, we gave the company 45 times PE in 2024, corresponding to a target price of 21 yuan, and gave it a “recommended” rating.
Risk warning: customer concentration is relatively high; industrial policy changes; market competition intensifies.