\u3000\u3 Guocheng Mining Co.Ltd(000688) 568 Geovis Technology Co.Ltd(688568) )
Event: the company recently released its 2021 annual report, with annual revenue of 1.04 billion yuan, yoy + 48.0%; The net profit attributable to the parent company was 220 million yuan, yoy + 49.4%; Deduct non net profit of 150 million yuan, yoy + 22.0%. The performance basically meets the previous market expectations. We believe that the company’s strategic product layout, continuous improvement of governance structure and the deep integration of digital earth and various industry applications are the driving forces for the continuous growth of performance.
The outsourcing cost increased by 83% year-on-year, and the gross profit margin decreased. In a single quarter, the scale of revenue increased quarter by quarter. The company achieved revenue of 100 million yuan, 230 million yuan, 250 million yuan and 460 million yuan from 2021q1 to Q4 respectively; The net profit attributable to the parent company was – 05 million yuan, 21 million yuan, 38 million yuan and 166 million yuan respectively. The annual comprehensive gross profit margin was 49.5%, a year-on-year decrease of 5.1ppt; The net interest rate was 23.3%, with a year-on-year increase of 1.7ppt. From 2019 to 2021, the company’s gross profit margin decreased from 59.4% to 49.5%, mainly because with the expansion of business and traditional fields, the company undertook more contracts with large amount, reduced single project development and increased outsourcing costs. However, the net interest rate has improved from 20.4% to 23.3% year by year, maintaining a steady upward trend.
Further explore market segments and make efforts to lay out civil areas. In terms of products, 1) geovis technology development and service revenue was 780 million yuan, yoy + 47.3%, accounting for 75.3% of the total revenue, and the gross profit margin decreased by 7.1ppt to 50.1% year-on-year; 2) Geovis software sales and data service revenue was 90 million yuan, yoy + 119.3%, and the gross profit margin increased by 14.3ppt to 75.6% year-on-year; 3) The revenue of geovis all-in-one machine was 50 million yuan, yoy-37.0%, and the gross profit margin increased by 5.3ppt to 57.8% year-on-year; 4) The revenue from system integration was 120 million yuan, yoy + 143.4%, and the gross profit margin decreased by 2.0ppt to 21.2% year-on-year. In 2021, the company completed the preparation for the establishment of six subsidiaries: star map space, star map measurement and control, star map weitianxin, star map wisdom, star map earth and star map defense, and successfully realized the group transformation. The company has been focusing on special field business, and is vigorously expanding civil business. The smart government achieved a revenue of 240 million yuan, yoy + 105.7%, and the expansion has achieved initial results, which will continue to increase in the future.
Increased R & D investment; Operating cash flow improved significantly. In 2021, the company’s period expense rate increased by 0.6ppt to 31.8% year-on-year. Specifically, 1) the management fee rate was 9.4%, with a year-on-year increase of 0.7ppt; 2) The sales expense ratio was 9.6%, with a year-on-year decrease of 0.3ppt; 3) The financial expense ratio was – 0.9%, with a year-on-year decrease of 0.8ppt; 4) The R & D expense rate was 13.7%, with a year-on-year increase of 1.0ppt. At the end of 2021, 5) accounts receivable and bills were 600 million yuan, an increase of 76.5% over the beginning of the year; 6) The advance payment was RMB 90 million, an increase of 73.8% over the beginning of the year, which was due to the increase of orders in hand by the company; 7) The inventory was 170 million yuan, an increase of 68.5% over the beginning of the year, due to the increase of products in process. The company’s net cash flow from operating activities in 2021 was 170 million yuan, yoy + 110.1%, which was due to the company’s increasing collection of accounts receivable and strengthening daily capital control.
Investment suggestion: at present, the company has formed six business segments to lay a strategic structural foundation for long-term performance growth. The company will give full play to its advantages in special fields and vigorously expand its business in civil fields. We expect the net profit attributable to the parent company from 2022 to 2024 to be 310 million yuan, 440 million yuan and 610 million yuan respectively. The current share price corresponds to 43x / 31x / 22x PE from 2022 to 2024. Taking into account the company’s growth flexibility and governance improvement space, we covered it for the first time and gave it a “recommended” rating.
Risk tip: industry expansion is less than expected; Intensified competition pattern, etc.
