Lower the profit forecast, lower the target price, and maintain the holdings increase rating. The company released its 2023 report and 2024 quarterly report. The former was in line with expectations, while the latter fell short of expectations. As a result, we reduced and updated the net profit attributable to the parent company in 2024-2026 to -1.05/0.73/295 million yuan (previous value was 0.48/526/- 100 million yuan), and the corresponding EPS was -0.03/0.02/0.09 yuan. Referring to the industry average valuation, 4x PB for 2025 was given, and the target price was lowered to 7.56 yuan (previous value: 10.82 yuan), maintaining an increase in holdings rating.
Performance fell short of expectations, and downstream investment slowed. In 2023, the company achieved revenue of 7.848 billion yuan, an increase of 13.43% over the previous year; net profit to mother was 357 million yuan, in line with expectations. Revenue for the first quarter of 2024 was 969 million yuan, down 28.70% year on year; net profit to mother was -158 million yuan, which turned into a year-on-year loss, lower than expected. The decline in revenue and profits was mainly due to a slowdown in telecom operators' investment.
Research and development results are remarkable, promoting cost reduction and efficiency. In 2023, the company completed a number of pre-research tasks such as 6G wireless, network and security, and technical verification platform construction; the system equipment completed the development of various new AAU and RRU platform equipment, and increased the localization rate; antenna feed and room division completed the release of new versions to achieve batch cost reduction. Telecom front-transmission stations have been delivered in batches, self-developed skin stations have been converted, and commercial versions are being expanded; the industry private network side completed the release of commercial versions such as rail transit solution cluster base stations, core networks, and dispatching stations. During the reporting period, 1,789 new intellectual property applications were added, and 1,469 new intellectual property licensing projects were added. In 2024, the company will focus on improving the quality and efficiency of operations, promoting cost reduction and improving energy efficiency per capita.
Catalysts: Increased share of main equipment, development of the domestic low-orbit satellite industry.
Risk warning: The development of the satellite industry falls short of expectations, and the share of main equipment falls short of expectations.