Case BL: E_Gongsi UMFA M Bu AR2Y0] In the three-quarter report of 2014, the first three quarters of 2024 achieved operating income of 0.254 billion yuan, a year-on-year decrease of 48.02%, and a net profit of 10.1921 million yuan to mother, an increase of 16.54% over the previous year.

Key points of investment

Operating income was under relative pressure, and net profit to mother achieved steady growth: the company achieved operating income of 0.254 billion yuan in the first three quarters, a year-on-year decrease of 48.02%, and achieved net profit to mother of 10.1921 million yuan, an increase of 16.54% over the previous year. This decline is mainly due to the fact that some projects have not been approved, resulting in revenue not being recognized. Among them, the third quarter achieved operating income of 95.7876 million yuan, a year-on-year decrease of 43.87%, and net profit to mother of -2.3401 million yuan, a year-on-year decrease of 212.7%. There have been significant improvements in cost control. The company's management expenses for the first three quarters were 42.6438 million yuan, down 30% from the same period last year, indicating that the company continues to promote cost reduction and efficiency measures. Financial expenses were $2.3165 million, an increase of 331% over the same period last year, mainly due to exchange losses due to issuing guarantees to pay fees and exchange rate fluctuations.

Cash flow improved markedly, and R&D investment continued to grow: Hylanxin's net cash flow from operating activities in the first three quarters of 2024 was $9.4084 million, an increase of 145.27% over the same period last year.

This significant increase indicates an improvement in the company's cash flow position and increased cash capacity from operating activities. The company's R&D expenses in the first three quarters were 42.2118 million yuan, up from 35.0744 million yuan in the same period last year. The company continues to increase investment in R&D to maintain technological leadership and market competitiveness. In particular, in the field of intelligent navigation and oceanographic exploration, the company continues to consolidate its market position through technological innovation, which helps the company achieve product innovation and market expansion over the long term.

Actively lay out new businesses to achieve continuous growth: In the first three quarters, the company and partners jointly invested in the establishment of the joint venture Digital Intelligence Center (Lingshui) Co., Ltd., which marked the company's exploration and expansion in new business fields. In addition, the company has also transferred land use rights by transferring control of wholly-owned subsidiaries, which may bring new business opportunities and revenue streams to the company. Hylanxin's undersea data center business not only benefits from the country's support for the marine economy and intelligent computing industry, but also responds to the demand for computing power in the digital economy era. With the promotion of the “dual carbon strategy” and the introduction of a green and low-carbon data center development action plan, undersea data centers have broad market application prospects due to their energy efficiency and low cost advantages.

Profit forecast and investment rating: The company's performance is slightly under pressure, so we slightly lowered our previous profit forecast. The company's net profit for 2024-2026 is 0.062/0.094/0.131 billion yuan, the previous value is 0.077/0.138/0.163 billion yuan, and the corresponding PE is 114.13/75/54 times, respectively, to maintain the “buy” rating.

Risk warning: 1) New business transformation risk; 2) fund-raising project risk; 3) accounts receivable risk.