Forever Opensource Software (BJ:834415)2024-07-26 07:00Investment Rating - The report assigns a "Recommended" rating for the company, Hengtuo Kairong [25] Core Views - Hengtuo Kairong is a core software supplier ensuring the safe operation of China's civil aviation industry, providing comprehensive industry solutions for airlines, airports, and other support units [1][13] - The company is expected to benefit from the growth of civil aviation and the low-altitude economy, with significant market potential in these sectors [31][73] - The company plans to increase R&D investment and expand its business into healthcare, automotive, finance, and digital governance, aiming for long-term growth [50] Financial Performance - The company reported revenues of 196 million, 179 million, and 191 million yuan for 2021, 2022, and 2023 respectively, with a compound annual growth rate of -4.31% over three years [19][23] - The net profit for the same years was 22.67 million, 7.03 million, and 20.08 million yuan, with a compound annual growth rate of -0.89% [19][23] - In Q1 2024, the company achieved revenue of 33 million yuan, a year-on-year increase of 9.79%, while net profit was 3.08 million yuan, a decrease of 30.56% [19][23] Profitability Metrics - The company's gross margin remained high, with sales gross margins of 44.07%, 39.83%, and 39.28% for 2021, 2022, and 2023 respectively [68] - The net profit margins for the same years were 11.58%, 3.93%, and 10.53% [68] - In Q1 2024, the gross margin was 49.29%, a year-on-year increase of 0.54 percentage points, while the net margin was 9.23%, a decrease of 5.36 percentage points [68] Revenue Forecast - The company forecasts revenues of 208 million, 225 million, and 240 million yuan for 2024, 2025, and 2026 respectively, with year-on-year growth rates of 9.02%, 8.09%, and 6.86% [51] - The expected net profits for the same years are 30.88 million, 33.50 million, and 38.47 million yuan, with year-on-year growth rates of 53.76%, 8.47%, and 14.86% [51] - The earnings per share (EPS) are projected to be 0.22 yuan, 0.24 yuan, and 0.27 yuan for 2024, 2025, and 2026 respectively [51] Market Outlook - The civil aviation market is expected to stabilize and grow, with domestic passenger traffic projected to increase, and the international market recovering [73] - The low-altitude economy is anticipated to reach a market size of 2 trillion yuan by 2030, indicating significant growth potential [73] - The digital economy in China is positioned as a key driver of economic development, with a market size exceeding 50 trillion yuan in 2022 [73]