Key points of investment
Incident: On March 30, 2024, Tianyuan Dike released its 2023 report. In 2023, the company achieved operating income of 6.587 billion yuan, a year-on-year increase of 15.71%, and realized net profit of 0.28 billion yuan, a year-on-year decrease of 13.06%, net profit after deducting non-return to mother of -43 million yuan, a year-on-year decrease of 3975.41%, and basic earnings per share of 0.044 yuan, a year-on-year decrease of 12.00%.
Benefiting from the continued growth momentum of domestic alternative finance, operator business fluctuates in the short term due to capital expenditure. In 2023, Tianyuan Dike's revenue reached 6.587 billion yuan, up 15.71% year on year, of which main business revenue reached RMB 6.556 billion, up 15.16% year on year. Thanks to good revenue growth and better cost control, the company achieved net profit of 28 million yuan in 2023, a year-on-year decrease of 13.06%. During the reporting period, impairment losses of goodwill were calculated at 65.2583 million yuan, and real estate disposal revenue of 508.561 million yuan, such as deducting these two non-operating factors affecting the company's net profit (total 14.4022 million yuan), net profit to mother was 42.7344 million yuan, an increase of 31.14% over the previous year, indicating an improvement in the company's operating efficiency. In 2023, the company's financial and communications industry revenue was 703 million yuan and 652 million yuan respectively, accounting for 44% and 41% of software and service business revenue, respectively, and financial industry revenue was 703 million yuan, up 13.24% year on year, and growth momentum continued. In the communications business sector, telecom industry revenue was 652 million yuan, a decrease of 3.46% year on year, mainly due to a decline in telecom operators' capitalization expenses and increased investment in self-development. The company is actively expanding the Chinese mobile market in 2023, but there is a lag in revenue and profit from new customer orders.
The subsidiary Jin HuaWei is one of Huawei's general distributors, and domestic computing power is accelerating the rapid growth of the ICT business. In 2023, the company's ICT product distribution business revenue reached 4.968 billion yuan, an increase of 20.21% over the previous year, becoming one of the company's important revenue sources. It is worth mentioning that its subsidiary Jin HuaWei's business revenue in the ICT product distribution sector reached 4.881 billion yuan, and net profit was 96 million yuan. The subsidiary Jin HuaWei is the general distributor of Huawei, Hyperfusion, and DJI. Benefiting from investment in domestic computing power infrastructure construction, increased IT spending, and low-altitude economic development, the company's ICT distribution business revenue continues to grow. Jinhuawei has established a nationwide sales and service network, formed technical support capabilities for the entire sales process of ICT products and solutions, and has been highly recognized by Huawei. Jin HuaWei grew rapidly along with the growth of Huawei's government and enterprise business, and has become one of the company's business segments in terms of scale.
The subsidiary Jin Huawei officially obtained the general dealer status of superfusion in November 2021, and officially qualified as a platform provider for the DJI drone industry in August 2022.
Accelerating the exploration of innovative application business scenarios for spatio-temporal big data, the drone track boom company is expected to fully benefit. The company continues to be deeply involved in the fields of intelligent connected vehicles, remote sensing analysis services for agricultural insurance, and drones, and accelerates the commercialization process and innovative application scenarios for mature applications. In the field of intelligent connected vehicles, it participated in the construction and development of projects such as intelligent connected demonstration bases, vehicle-road collaborative cloud control platforms, and digital twin platforms in leading national cities in Nanjing, Beijing, Sichuan, etc. Examples of agricultural insurance remote sensing analysis service applications include underwritten land marking, crop yield estimation, disaster loss analysis and assessment, and AI-based location recognition; drone software products and applications include drone flight control platforms, drone flight path planning, drone image AI recognition, and drone image stitching. On March 27, 2024, four departments of the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Finance, and the Civil Aviation Administration of China jointly issued the “Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)”, which clearly states that by 2027, new general aviation equipment will achieve commercial applications in urban air transport, logistics and emergency rescue. The low-altitude economy will form a trillion market size in 2030, and the company's spatio-temporal big data business is expected to fully benefit.
AI+ data element products were introduced to central state-owned enterprises such as operators to accelerate the construction of the company's second growth curve. The company's AIGC platform has capabilities such as training documents, video generation, intelligent testing, and simulation to train digital people, and is used in internal training scenarios for operators and central state-owned enterprises; AI questioning products use natural language methods to obtain data, generate reports, perform data analysis, etc., to help operators transform digitally and intelligently. In addition, the company has corresponding products in intelligent knowledge bases, intelligent risk control, intelligent price monitoring, intelligent material management, AI agents, etc., and has obtained new customers in the procurement fields of operators and central state-owned enterprises; innovative products such as AI anti-fraud models, insensitive playback verification platforms, and asset management industry data interconnection development platforms have been used in many large financial institutions. In the field of data elements, the company participated in the operators' data element circulation work, upgraded the external data fusion analysis platform, and studied private computing technology to apply it to cross-enterprise data element circulation. The company will continue to combine AI technology and applications to jointly nurture AI model inside products suitable for various industries, and build the company's second growth curve based on the new artificial intelligence business.
Investment advice: The company is leading the domestic market in industrial cloud, big data solutions, and digital intelligence operations. As telecom operators have transformed into digital technology enterprises, innovation and digital transformation in the financial industry continue to advance, we believe that the company is expected to continue to grow rapidly. Considering changes in the direction of the company's new business layout, etc., we will adjust the profit forecast and expect revenue of 2024-2026 to 76.74/88.86/10.059 billion yuan (the previous value of the 2024-2025 forecast was 78.51/9.065 billion yuan), up 16.5%/15.8%/13.2% year-on-year. The company's net profit to mother was 0.46/0.57/, respectively 0.69 million yuan (2024-2025 forecast was 1.10/151 million yuan), up 60.7%/25.2%/21.7% year on year, corresponding EPS was 0.07/0.09/0.11 yuan, PE was 110.5/88.3/72.6, maintaining the “gain” rating.
Risk warning: operator demand falls short of expectations, risk of software iteration, risk of quarterly fluctuations in business revenue, and falling short of expectations in project delivery and acceptance.