Benefiting from the deepening of intelligent coal mine construction, the company's intelligent geological support business achieved rapid growth. At the same time, increased product maturity led to an improvement in gross margin, and cash flow conditions continued to improve.
Incident: The company released its 2023 annual report, achieving full year revenue of 396 million yuan, YoY +8.56%; net profit to mother of 84 million yuan, YoY +5.39%; net profit after deducting non-return to mother of 83 million yuan, YoY + 2.52%.
Looking at a single quarter, 23Q4 revenue YoY -5.01%, net profit to mother YoY -29.29%, deducted non-return net profit YoY -33.09%.
Benefiting from the deepening of intelligent coal mine construction, the intelligent geological support business is growing rapidly. By product line: LongRuan GIS software revenue in 2023 was 0.15 million yuan, YoY +2.92%; intelligent mining industry software revenue was 362 million yuan, YoY +10.70%. In the intelligent mining industry software product line, the management platform business revenue is about 178 million yuan, accounting for about 45% of the total revenue. It is still the company's dominant business, completing more than 60 intelligent control platform applications for large and medium-sized mines throughout the year; the intelligent geological support business revenue is about 94 million yuan, YoY +70%, and completed more than 30 pairs of intelligent geological support projects for coal groups such as China Energy, Shaanxi Coal Group, and Shaanxi Coal Group. We believe that the deceleration of the control platform business and the rapid growth of the intelligent geological support business indicate that intelligent coal mine construction is deepening in the direction of intelligent production, and the future release of intelligent mining products is also worth looking forward to.
Increased product maturity led to improved gross margins, and cash flow continued to improve. The comprehensive gross profit margin in 2023 was 54.55%, up 2.94 pcts year on year. Among them, the smart mining industry software business gross profit margin was 54.48%, up 4.30pct year on year, mainly benefiting from the improvement in the company's product maturity. In terms of expenses, sales, R&D, and management expenses increased by 45.98%/18.45%/1.86%, respectively. Among them, the high growth rate of sales expenses was mainly due to the company actively participating in regional and national industry exhibitions, continuously optimizing the layout of the marketing system, and a significant increase in promotion expenses and real estate property expenses compared to the previous period; the increase in R&D expenses was mainly due to companies increasing R&D equipment, optimizing the R&D environment, using cloud servers, and increasing equipment depreciation costs. The company's cash flow situation continued to improve in 2023. Cash received from selling goods and providing services increased 21.77% year over year, and net operating cash flow increased 17.19% year over year.
Maintain a “Highly Recommended” investment rating. The company is expected to have 24-26 revenue of 471/5.84/696 million yuan, net profit of 1.05/134/163 million yuan, YoY +24%/28%/22%. The current stock price corresponds to PE19/15/12x, maintaining a “highly recommended” investment rating.
Risk warning: The implementation of smart coal mining policies falls short of expectations; the prosperity of the coal mining industry is declining; competition is intensifying.