Key points of investment:
Event: Chaotu Software releases its 2023 Annual Report. Operating income was 1.98 billion yuan, up 24% year on year. Net profit attributable to mother was 150 million yuan, turning a loss into a profit, and a loss of 339 million yuan for the same period last year. 23Q4 revenue was 710 million yuan, up 19.79% year on year, turning a loss into a profit. A loss of 400 million yuan was lost in the same period last year.
Revenue growth was in line with expectations, gross margin rose sharply, cost control was beginning to bear fruit, and net operating cash flow improved dramatically. Annual revenue of 1.98 billion yuan is close to the upper limit of the forecast range (1.92 billion yuan). Gross margin increased to 57.88%, up 11.34pct from 2022, a five-year high. On the cost side, the management cost rate decreased by 2.14 pct, the R&D cost rate decreased by 2.47 pct, and the sales cost ratio increased by 1.48 pct. Net cash flow from operating activities was $56 million, a significant improvement from 2022 to $116 million, and changed from negative to positive.
The lower net profit than forecast was due to impairment charges. The estimated net profit range is 18-230 million yuan, with an actual increase of 150 million yuan, mainly due to an increase of 15.09 million yuan in goodwill impairment and 37 million yuan in bad debt impairment in 23 years.
AI has transitioned to an active implementation phase. 1) NLP big model. The company released an intelligent question and answer product (beta version) based on the big model of real estate and AI. 2) CV large model. The product SuperMap GIS 2023 released in June this year has integrated the SAM visual large model. 3) AIGC's AI mapping related capabilities have been implemented and piloted on the project.
The amount of the newly signed Xinchuang contract reached a new high, with a year-on-year increase of more than 100%. Among them, the company's remote sensing AI products have successively won bids for a provincial satellite application technology system construction project (the winning bid amount exceeds 10 million yuan), several provincial satellite application technology centers, and GIS platform procurement projects for remote sensing institutes in many places. It also successfully signed GIS-related projects for users such as the National Pipeline Network Group.
Data element orders continue to land, standing on a high ground for development. The contract was signed for the Tangshan Comprehensive Information Platform construction project (contract amount of 21.546 million yuan), which is a sample project for the company's prefecture-level municipal data bureau. In March 2024, a strategic cooperation framework agreement was signed with Taizhou Data Industry Group Co., Ltd. The company focuses on public data operations, constructs data operation framework services, and continues to deepen research and construction (spatial information × data elements) × (To G/B/C) typical data operation scenarios.
Localized GIS leads the way and maintains the “gain” rating. Localized GIS leads the way and maintains the “gain” rating. As the world's leading GIS leader, Chaotu Software deeply lays out forward-looking opportunities, continues to make efforts in the field of data elements, and has sufficient growth momentum. Considering that the company will improve order quality and reduce low-gross margin projects after 2022, the 2024-2025 revenue forecast was slightly lowered to 2,412 billion yuan or 2,966 billion yuan (the original forecast was 23.91 billion yuan and 2.87 billion yuan), and the 2026 forecast was increased by 3,560 billion yuan.
Taking into account the company's increased investment in research and development in industries such as data elements and large models, the 2024-2025 profit forecast was lowered to 284 million yuan and 380 million yuan (the original forecast was 382 million yuan and 493 million yuan), and the 2026 forecast was increased by 483 million yuan. Corresponds to 28 times PE in 2024. Maintain an “Overweight” rating.
Risk warning: The industry's credit and innovation promotion progress is low expectations, demand for natural resource informatization risks falling short of expectations, and government demand is delayed.