Core views:
Revenue performance is under pressure, and operating cash flow has been greatly optimized. The company released its 2023 annual report and 2024 quarterly report: In 23, the company achieved revenue of 1,510 billion yuan (+0.37%), net profit to mother of 203 million yuan (-28.51% year over year); 24Q1 achieved operating income of 232 million yuan (-22.30% year over year), and net profit to mother of 6.41 million yuan (23Q1 was 28.24 million yuan). Market competition intensified, and the company's gross margin in '23 was -5.04pct year on year to 41.41%, putting pressure on performance. However, the company strengthened its collection efforts, and the net operating cash flow in '23 reached 318 million yuan (+54.96% year over year).
Industrial process analysis systems are the main driving force for growth, carbon monitoring and scientific instrumentation potential stocks. By business, the company's ecological environment monitoring system achieved revenue of 1,208 billion yuan (-5.53% YoY), with a gross margin of 45.23% (YoY -2.87pct); the industrial process analysis system achieved revenue of 244 million yuan (YoY +42.16%), and gross margin of 30.28% (YoY -8.60pct). Emerging businesses:
(1) Carbon monitoring: The company formed strategic cooperation with several power groups and won bids for multiple carbon monitoring test site projects; the company's ship carbon emission measurement and monitoring system can support the international mutual recognition of customers' carbon measurement data; and participated in the preparation of various industries/local standards related to carbon monitoring. (2) Scientific instruments: Relying on overseas mergers and acquisitions, the company focuses on chromatography and time-of-flight mass spectrometers. The prototype of the scientific instrument platform is beginning to be developed. In the future, it will expand the semiconductor electronic gas analysis market with the Orthodyne brand.
The dividend rate is over 90%, and the latest dividend rate is 4.7%. The repurchase shows the company's confidence in development. In 2023, the company plans to pay a dividend of 0.3 yuan per share, with a total cash dividend of 188 million yuan. The dividend payment rate will reach 92.49% (previous value was 86.62%), corresponding to the latest market capitalization dividend rate of 4.7%. Furthermore, in February 2024, the company announced that it plans to use its own funds to repurchase 50 million yuan to 100 million yuan, with a repurchase price of no more than 7.50 yuan/share. By the end of February '24, the company had a cumulative repurchase amount of 56 million yuan.
Profit forecasting and investment advice. The estimated net profit for 24-26 will be 236.274/311 million yuan, corresponding to the latest PE of 16.81/14.48/12.75 times. Referring to comparable companies, we gave the company 25 x PE for 24 years, corresponding to a reasonable value of 9.28 yuan/share, maintaining a “buy” rating.
Risk warning. Order acquisition falls short of expectations; competition increases risk; risk of bad debts, etc.