Guosheng Intelligence(SH:688558) Southwest Securities·2024-04-23 04:30Investment Rating - The report maintains a "Hold" rating for Guosheng Zhike (688558) [1][28]. Core Views - The company experienced revenue pressure in 2023, with total revenue of 1.1 billion yuan, a year-on-year decrease of 5.1%. The net profit attributable to the parent company was 140 million yuan, down 23.1% year-on-year. In Q4 alone, revenue was 260 million yuan, a decline of 9.0% year-on-year and 7.6% quarter-on-quarter, with a net profit of 30 million yuan, down 22.3% year-on-year and 11.0% quarter-on-quarter [1][9]. Summary by Relevant Sections Financial Performance - In 2023, the company reported a revenue of 1,104.12 million yuan, with a growth rate of -5.08%. The net profit attributable to the parent company was 142.68 million yuan, reflecting a growth rate of -23.08%. The earnings per share (EPS) was 1.08 yuan, and the return on equity (ROE) was 8.86% [2][10]. Future Projections - The company is expected to see a recovery in demand, with projected net profits of 160 million yuan in 2024, 183 million yuan in 2025, and 211 million yuan in 2026, indicating a compound annual growth rate (CAGR) of 14% over the next three years [10][24]. Market Conditions - The domestic market shows strong demand for high-end machine tools, driven by government policies promoting large-scale equipment updates. The overseas market presents significant growth potential, with the market size being over twice that of the domestic market [10][24]. Cost and Profitability - The overall gross margin for 2023 was 24.7%, down 1.6 percentage points year-on-year, primarily due to intensified industry competition. The Q4 gross margin was 22.5%, a decrease of 2.1 percentage points year-on-year and 2.6 percentage points quarter-on-quarter [9][10]. Investment and R&D - The company has increased its R&D investment, with the R&D expense ratio rising to 5.0% in 2023, up 0.6 percentage points year-on-year. The overall expense ratio for the year was 11.7%, an increase of 0.3 percentage points [9][10]. Valuation Metrics - The price-to-earnings (PE) ratio is projected to decrease from 18 in 2023 to 12 by 2026, while the price-to-book (PB) ratio is expected to decline from 1.66 to 1.29 over the same period [2][10].