(report producer/analyst: Shenwan Hongyuan Securities Shi Xinzhan Liu Yang )
1. Since Boston matrix , the fourth level of advancement has clarified the growth path
company is rooted in the satellite application industry. With the continuous pursuit of the "second growth curve", it has grown into a domestic leader in satellite application and operation services since its establishment in 2008.
According to the industrial development stage and the upgrading and iteration of the delivery model, the company has successively launched three product lines: space infrastructure planning and construction, industry application services and cloud services, corresponding to Taurus, Stars, and Question Mark quadrant in the Boston matrix. The current business system is full of vitality and resilience:
Space infrastructure planning and construction:
benefited from many major national strategic projects such as " high-resolution ground observation system " and "National Civil Space Infrastructure Construction". After more than ten years of technical research, the company's independently developed PIE products have reached the international advanced level and are in an absolute leading market position in the field of civil remote sensing satellite ground application system design. In the future, civilian remote sensing satellites will continue to be launched in large quantities, and infrastructure will remain an important cash bull business for the company.
Industry Application Service:
Company's core product PIE-Engine platform has developed from a single multi-source remote sensing data processing tool to a new generation of digital earth platform that carries out massive earth observation data, carries out space-time intelligent analysis, and realizes twin modeling of the physical world; the solutions based on the platform cover more than ten industries such as natural resources, emergency management, ecological environment, meteorological and marine, agriculture and forestry, environmental consulting, hydrology and water conservancy, disaster prevention and mitigation, urban planning, etc., providing aerospace big data analysis tools for the government to realize comprehensive information governance and national defense information construction.
2021 The revenue of PIE+ industry increased by 174% year-on-year, accounting for 86%, making it the current star business.
cloud service:
cloud transformation, the company has developed a city-level remote sensing cloud platform by combining single-element cloud products involving fire monitoring, pollution grids, black and odorous water bodies, planting planning and other single-element cloud products with urban comprehensive governance needs, with the needs of urban comprehensive governance, with all-round service capabilities of prefectures, districts, counties, and townships. It has signed an overall cooperation framework intention agreement with Hebi, Jiaxing Nanhu, Huanggang , and Foshan governments. With the help of cloud service capabilities, we will explore the construction of a C-end content matrix in the future.
cloud business has a high growth rate, but it currently accounts for a small proportion (81% of cloud revenue growth in 2021, accounting for about 3%), and is in the question mark quadrant of the Boston matrix.
advances in four major directions. The company's growth path to leading the smart earth has been clarified. The subsequent chapters will be detailed:
One: The industrial chain is connected.
expands from the middle and lower reaches of the aerospace information industry chain to the upstream, accelerates the development of independent data sources mainly based on aerospace/aviation, and forms a full-industry chain layout of the "upstream independent data-midstream core platform-downstream scale application" business model.
On the one hand, it successfully completed the targeted additional issuance, promoted the construction of distributed interference radar satellite constellations, and provided commercial independent radar remote sensing data source.
On the other hand, the company has formed an independent drone production and application system, which can be widely used for district and county-level spatial information acquisition. The company plans to issue convertible bonds for to promote the production and implementation of drones.
The second: Flowering on the application side is multi-point.
Under the catalysis of policy, satellite application business plays an important role in resource and environment and ecological protection, disaster prevention and mitigation and emergency management, meteorological forecasting and climate change response, social management and public services, urbanization construction and regional coordinated development, poverty alleviation, etc., and has emerged comprehensive application scenarios across industries and multiple fields.
At the same time, the manufacturing cost of satellite launches has been significantly reduced, resulting in a golden period of industry development with "richer space-based data, cheaper prices, and wider applications". The current high growth track includes emergency/natural resources/water conservancy/agriculture/ special industry , etc.
The third: Cloud transformation is accelerated.
adopts a cloud-native technology architecture, attracting dozens of satellite data resources at home and abroad, forming a digital earth platform that comprehensively benchmarks Google Earth Engine. Currently, there are nearly 70,000 registered users.
In the future, the cloud service platform will be supported by self-built commercial SAR satellite constellations, aerial remote sensing networks, satellite Internet, etc., and connect to massive aerospace perception data, which may lead to more new application scenarios and symbiotic ecology. While providing industry application solutions to government and enterprises and other customers, it will further expand the mass application market and promote the gradual improvement of the smart earth cloud service ecosystem.
The fourth: management and marketing system optimization.
Since its listing in 2019, the company launched IPD incremental performance management reform, gradually forming a market structure with comprehensive industry and comprehensive coverage of regions. In terms of marketing, we continue the market sinking strategy of "deeply tapping demand and promoting from top to bottom", continue to build a marketing network covering the country, form a four-level marketing system composed of headquarters, regions, provincial offices, and urban nodes, and enhance the sales capabilities of replicable products.
2. The upstream, middle and downstream are connected to build an industrial closed loop
.1 Started from the midstream system: space infrastructure planning and construction
The company's midstream business in the industrial chain is divided into space infrastructure planning and design services and space infrastructure system construction:
Space infrastructure planning and design services: mainly carries out plan demonstration and consulting and design services covering the scope of "new infrastructure" such as satellite operation centers, satellite constellations, data centers, major ground observation infrastructure, industrial innovation infrastructure, and station and network facilities.
, and based on the existing satellite ground application system demonstration and design services, the company has successively carried out consulting and design services covering special capacity building such as satellite operation centers, industry big data processing centers, and integrated air-space governance platforms.
Space infrastructure system construction: mainly provides one-stop services that integrate observation data analysis, cloud computing power foundation, efficient algorithm models, and information visualization products. At the same time, it explores the deep value of data, provides secondary empowerment for products and explores ways and methods to improve service quality.
products include the self-developed basic remote sensing image processing software "PIE", the remote sensing data processing series software based on PIE and the basic software platform "PIE-Map" of Beidou-3 satellite system, and the smart earth cloud service platform "PIE-Engine".
Company's advantages in the midstream of the industrial chain are mainly reflected in the strong underlying software technology, high personalized demand satisfaction, and high customer stickiness:
1) The data processing link in the midstream of the industry is the foundation of the company's success. It has been continuously researching and developing for more than 10 years. The underlying software with PIE as the core has profound technical accumulation and undertakes feasibility research and plan preparation for many major national strategic projects. As the core basic software for remote sensing data processing, the
product mainly serves national ministries or Military Commission organs. It is highly versatile and has a high degree of integration with customer business. Stable market demand plays an irreplaceable role in customer core business.
2) As a basic software that takes into account both professionalism and universality, the company has developed the "PIE-SDK secondary development component package" for PIE, reducing the difficulty of users' secondary development from the data end, software end and display end, improving the adaptability with domestic software and hardware, and has strong reusability, high development efficiency, low cost, and is easier to meet users' personalized needs.
.2 The downstream application is based on: "PIE+ industry" provides the largest increment
As the company's business develops to a platform, the number of segmented industries with integrated access is gradually increasing. As the company's core product of its business development, the PIE-Engine platform has developed from a single multi-source remote sensing data processing tool to a new generation of smart earth platform that carries out massive earth observation data, carries out space-time and intelligent analysis, and realizes twin modeling of the physical world.
PIE+ industry grew rapidly. According to the company's financial report, the revenue of PIE+ industry in 2019-2021 was RMB 291/462/1.268 billion, with a CAGR of 109%.Key industry cases in recent years, as shown in the following table, opportunities for each core track will be discussed in detail in Chapter 3:
.3 Extended to upstream data: satellite + drone fills the independent data source
The company has adopted the following two strategic actions, and with the help of capital market power, it expands from the middle and lower reaches of the industrial chain to the upstream, actively deploys the entire industrial chain, and explores the "second growth curve":
1) Promote the distributed interference SAR high-resolution remote sensing satellite system project through private placement financing.
2) Promote the digital transformation of interactive holographic smart earth industry through convertible bond financing through convertible bond financing .
According to the company's 2022 interim report, the "Aerospace Hongtu 1" satellite constellation has basically completed domestic frequency coordination work, and is actively applying for radio frequency licenses, space radio stations and earth station licenses, and has completed detailed design, interface signing, and production of satellite subsystems. Most of the stand-alone equipment of the satellite platform have been delivered, and the ground and application prototype system joint test has been completed, the satellite and ground interface definition and docking test outline is being carried out. The ground core system joint test is being carried out. The satellite engineering development work is progressing smoothly as planned and is expected to leave the factory at the end of this year.
is expected to comprehensively use remote sensing satellite , drone aerial survey, high-precision ground observation, other IoT perception and other data acquisition technologies to achieve the construction of an integrated holographic perception system of "space, space and earth".
Company has obtained independent data sources mainly based on aerospace by building its own InSAR constellation and self-developed drone services. On the one hand, it provides domestic users with scarce high-precision, high-time, and high-security data. On the other hand, it relies on stable data sources to expand its own industrial chain layout and improve integrated services.
We believe that the integration of the industrial chain has the following advantages:
1) The industrial chains feedback each other and expand market share: launches SAR remote sensing satellite constellations, the company's independent acquisition capabilities of commercial satellite data are constantly enhanced. It can leverage the advantages of data resources, software services, and industry applications to provide users with integrated data-information-knowledge services, providing space-based capability support for breaking through the bottleneck of independent and controllable data source and large-scale promotion of cloud services. High-quality upstream data sources effectively reduce the development costs of mid- and downstream products, expand the scope of application, and combine the high viscosity of industry customers, which is conducive to the company's market share and the increase in profit margins.
2) The products are adapted internally to improve development flexibility: has formed an independent drone production and application system after years of research and development, and has mature models of products to facilitate the collection of data from different industries and conditions, which is conducive to helping the application implementation (such as disaster monitoring, real-life three-dimensional, etc.). At the same time, since remote sensing satellites and drone systems are both self-produced/independently hired, they are highly adaptable to their own other businesses, and have high flexibility in development and use
3. Applications bloom in multiple points, enjoying policy catalysis
As the company's business develops towards platformization, the number of segmented industries with integrated access is gradually increasing. The
PIE-Engine platform has developed from a single multi-source remote sensing data processing tool to a new generation of digital earth platform that carries out massive earth observation data, carries out space-time intelligent analysis, and realizes twin modeling of the physical world.
's platform-based solutions cover more than ten industries such as natural resources, emergency management, ecological environment, meteorological and marine, agriculture and forestry, environmental consulting, hydrology and water conservancy, disaster prevention and mitigation, urban planning, etc., providing aerospace big data analysis tools for the comprehensive government information management and national defense information construction.
policy continues to provide the catalysis for the implementation of industry applications.
With the release of relevant national 14th Five-Year Plans, satellite remote sensing applications have gradually realized the business application of national and provincial government departments through information planning and special planning, and have emerged in comprehensive application scenarios across industries and multiple fields.
As satellite data costs continue to decrease, data sources continue to enrich, and multi-source data fusion technology gradually matures, remote sensing data services are more granular, more refined and intelligent, and the application scenarios of remote sensing combined with the industry continue to sink.
.1 Emergency Management: Special demand for risk census has taken the lead in
In the emergency management track, the company mainly revolves around the first National Comprehensive Risk Census of Natural Disasters (hereinafter referred to as "Fengpu") and the "14th Five-Year Plan" National Emergency System Plan (hereinafter referred to as "Plan").
"Fengpu" is fully carried out in 2,800 districts and counties in my country. The targets mainly include earthquakes, geology, meteorology, water and drought, oceans, forests and grassland fires. The method is to comprehensively use advanced technologies such as geographic information , remote sensing, the Internet, cloud computing , big data and other advanced technologies to carry out census basic spatial information preparation and software system construction. Based on the achievements of the 13th Five-Year Plan, the main indicators of my country's emergency management during the 14th Five-Year Plan period have been clarified in order to further improve the emergency management system and mechanism and achieve more efficient disaster risk prevention and control.
The company's construction results in the emergency management track are as follows:
1) Data side: Establish a national comprehensive natural disaster risk investigation and assessment index system to form a national comprehensive natural disaster risk basic database based on regions and types.
2) Product side: company participated in the construction of the "National Comprehensive Information Management Service Platform for Emergency Refuge Places" and the "National Comprehensive Disaster Risk Monitoring and Early Warning System". The core construction of satellite remote sensing network, emergency management informatization, and world integration projects has been strengthened, and future disaster zoning has been divided and risk monitoring and early warning network system has been built.
2022 Winter Olympics , the company's risk warning system provides monitoring and early warning services for natural disaster risks around the venue in real time.
3) Sales side: participated in the first national pilot project, and the market share of the project-related market is the first in the country. As of the end of 2021, the company has implemented a total of 662 disaster risk census projects, covering 32 provinces and autonomous regions; as of the end of June 2022, the company has won more than 900 bids.
On this basis, the company has won bids for disaster zoning assessment, pilot projects for the application of census results in many districts and counties. The company participated in the first national pilot project, and its marketing and technical service capabilities were transferred to districts and counties.
2022 is the year of "Fengpu" completion. The main goal is to fully complete the evaluation and division of more than 300 prefecture-level cities and more than 2,800 counties. As one of the companies with market share advantages, we believe that the company's business performance in this track this year will still be outstanding.
.2 Natural Resources: Real-life three-dimensional application has entered the accelerated implementation period
Industry application software represented by "real-life three-dimensional" is an important direction in the current natural resource track.
Ministry of Natural Resources attaches great importance to the construction of real-life three-dimensional China, and has successively issued a series of documents such as "Technical Outline for Real-life Three-dimensional China Construction 2021 Edition" and "Notice on Comprehensively Promoting Real-life Three-dimensional Construction".
strives to achieve urban-level real-life three-dimensional resolution with better than 5 cm resolution by 2035, and achieve coverage of cities at or above the prefecture level and county-level cities with conditions.
In addition, by 2025, the goal is to enable more than 50% of government decision-making, production scheduling, and life planning to carry out management activities in three-dimensional space; by 2035, more than 80% of management activities to carry out management activities in three-dimensional space.
The real-life three-dimensional market is being unfolded nationwide, and the narrow market size can reach the level of tens of billions.
According to the "2022 Geographical and Space Industry Trend Report" released at the 2022 WGDC Conference, real-life three-dimensional is in the early stage of construction. Based on the overall planning of the Ministry of Natural Resources, based on the average project amount of each prefecture-level city in the past three years as the prediction basis, it is estimated that the real-life three-dimensional market size in 2025 will be approximately 4 billion yuan, and the cumulative real-life three-dimensional market size from 2022 to 2025 can reach 10.3 billion yuan.
The above narrow market space calculation only considers the data collection process. Once the platform and application services of real scene 3D are paid attention to, the market size of broad real scene 3D will increase by ten times or even hundreds of times.
Based on self-developed PIE software, the company has developed a real-life three-dimensional model production and release system. PIE-TDModeler In the three core dimensions of data end, product end and application end of real-life three-dimensional China, company has advantages:
1) Data end: company has the advantages of the industrial chain closed-loop and has the full-link service capabilities. The upcoming self-built InSAR constellations and self-developed and produced drones provide stable first-hand data sources, which will effectively reduce the overall data acquisition cost.
2) Product side: company has first-mover advantages and technical advantages, and is one of the few units with the ability to undertake total projects. On the one hand, the company participated in the formulation of digital processing standards in the early stage of the industry. In the data processing stage, its own software has strong adaptability to industry needs; on the other hand, real-life three-dimensional as a cross-industry application scenario allows the company to rely on the mature technology accumulation of previous products to develop a "space, space and earth integration" system and integrate it into PIE-TDModeler.
3) Application side: company has customer advantages. The company's downward strategy is consistent with the real-life three-dimensional "prefecture-level cities will be initially achieved full coverage in 2025". In recent years, a large amount of channel expansion investment has helped to increase the number of customers in application services.
.3 Smart water conservancy: Directly benefiting from the acceleration of investment in stabilizing growth
Water conservancy investment plays an important role in boosting economic growth. As part of infrastructure investment, water conservancy investment plays a certain countercyclical regulatory role in the economic downturn.
According to this year's plan: for every 100 billion yuan investment in major water conservancy projects, it can drive GDP to grow by 0.15%, and create 490,000 new jobs. It is estimated that 800 billion yuan of water conservancy investment will be completed in 2022, a total of 1.2 percentage points will be driven by GDP growth in the whole year of 2022, and 3.92 million new jobs will be created.
Satellite application implementation in the water conservancy industry has been catalyzed.
Company uses high-space resolution remote sensing satellites, low-altitude drones, Beidou and geographic information technology to detect the construction progress, scope and surrounding environment of water conservancy projects:
On the one hand, relying on years of technical accumulation in the application fields of remote sensing and Beidou navigation satellites, and using Beidou/GNSS technology to achieve real-time continuous automatic monitoring of key areas;
On the other hand, based on the "Aerospace Hongtu 1 SAR Constellation", it leverages its advantages of large-scale, high-precision, and low-cost to realize large-scale monitoring of important facilities such as water conservancy projects and slopes and their surrounding surfaces.
Relying on its mature software and hardware integration capabilities, the company has developed an intelligent system platform for full-cycle supervision of water conservancy projects.
Company has participated in the construction of multiple provincial water conservancy engineering information management systems, and is also responsible for the construction of related projects such as Henan, Gansu, Shaanxi, and Liaoning.
construction includes a series of supporting application systems such as engineering safety management, water situation measurement and reporting, project operation and maintenance, operation scheduling, etc., which can fully display the safety status of water conservancy project scheduling and upstream and downstream, and ensure the safe operation of water conservancy projects.
.4 Smart Agriculture: Multi-dimensional participation in digital rural construction
The current demand for agricultural intelligence is constantly increasing, and the conditions are constantly ripe.
According to the "three adjustments" data, the existing arable land in the country is 1.918 billion mu, a decrease of 113 million mu from 10 years ago, and the area of medium and low-yield fields accounts for more than 2/3 of the total arable land area.
Smart Agriculture is a major strategic measure to reshape my country's modern agriculture. It plays a prominent role in protecting arable land and improving the efficiency of farming and management. The quantity and quality of data that can be collected by farm arable land are also constantly improving.
It is estimated that by 2050, the average number of data points that can be collected per farm per day will rise from 190,000 in 2014 to 4.1 million. China's agricultural drone revenue in 2021 was approximately RMB 2.9 billion, and is expected to be RMB 11.5 billion in 2025, with a compound growth of 41% in 21-25.
Company fully utilizes the advantages of massive data in agriculture and rural areas and enriching application scenarios, and provides a variety of solutions in agricultural insurance, cultivated land protection and rural digital comprehensive governance:
1) Relying on cloud platforms such as real-life three-dimensional and PIE-Engine, builds a new data infrastructure with digital villages as the core theme, including but not limited to cultivated land protection, meteorological disasters, environmental information, crop growth, pests and other real-time monitoring and analysis and intelligent decision-making. The company uses high-precision short-term weather forecasts to assist fruit farmers in Ningling, Beijing Daxing and Tongzhou in Ningzhou to deal with extreme weather such as frozen and heavy rain, and avoid losses of one million yuan.
2) Help the digital transformation of agricultural insurance.
Company assists insurance companies in crop remote sensing review (remote sensing standard verification), high-precision quantitative monitoring of disasters, quantitative monitoring of rice lodging and other remote sensing monitoring, improve work efficiency in agricultural insurance underwriting, verification, monitoring and loss determination, and realize underwriting according to the chart, disaster assessment, rapid loss determination, and accurate claims settlement.
3) Promote the intelligent protection of arable land.
Based on the integrated monitoring and supervision methods of "space and earth", the company provides an integrated service model of "1 platform + 1 set of data + N applications" to natural resource management departments at all levels, Ministry of Agriculture and Rural Affairs, and industry users:
4. Cloud transformation is accelerated, business model optimization
company adopts a cloud-native technology architecture to form a digital earth platform that comprehensively benchmarks Google Earth Engine. The platform has nearly 70,000 registered users, the total data volume reaches 6PB, and the number of data sets reaches more than 160, covering more than ten fields such as meteorology, oceans, vegetation, agriculture, water conservancy, ecology, and atmosphere. In terms of cloud service capabilities, PIE-Engine:
) has increased the drone service capabilities for agriculture, energy and construction projects, and can provide SaaS-based drone inspection and precise construction supervision services to small and medium-sized parks;
2) has released a subscription-based SAR radar data SaaS service for ground settlement and large infrastructure deformation monitoring nationwide, forming settlement monitoring products in more than 30 key national areas, completing the production of nearly 100 user orders, and empowering industry applications with professional timing InSAR processing technology at extremely low costs.
Cloud Service product line has strong growth potential, and equity incentives guide high growth targets.
's cloud service platform will be supported by new infrastructure such as self-built commercial SAR satellite constellations, aerial remote sensing networks, satellite Internet, etc., and connect to massive aerospace perception data, which may lead to more new application scenarios and symbiotic ecology. While providing industry application solutions to government and enterprises and other customers, it will further expand the mass application market and promote the gradual improvement of the smart earth cloud service ecosystem.
According to the company's latest equity incentive plan goals, based on cloud business revenue in 2021, the average annual compound growth rate of cloud business revenue from 2022 to 2024 will not be less than 70%.
Diversified application scenarios and sinking service objects drive the market scale to increase.
Currently, the cloud services are mainly government agencies and large commercial institutions in the agriculture, electricity, new energy and other industries.
Company has developed a comprehensive and full-factor urban-level remote sensing cloud platform by combining single-factor cloud service products (fire monitoring, pollution grids, black and odorous water bodies, planting planning, etc.) with diversified urban governance needs - on the one hand, it explores cross-industry market demand, and on the other hand, it has been sinking from prefectures to districts, counties and townships in all directions.
At the same time, the company is also actively developing mass-market application products to provide services such as meteorological disaster warning, real-time support for air quality, and epidemic monitoring reports.
5.IPD Change and marketing sinking drive efficiency enhancement
The company's management optimization is represented by IPD changes, laying a solid foundation for long-term healthy growth.
Starting from the second half of 2019, the company has begun to implement the IPD (Integrated Product Development) system reform, and decided to complete the customer segmentation in 2 years, build IPD product research and development management, formulate job standards and establish an incremental performance appraisal system. The system of
follows Huawei , realizing process-based management from opportunity sorting to commercial monetization, which can effectively improve operational efficiency, reduce implementation costs, and achieve incremental development. IPD has been successfully implemented by many domestic and foreign companies such as IBM, Boeing , Nokia , DuPont , Cisco , Huawei, Fangtai , etc., and has proven to be an efficient product development model.
Through IPD incremental performance reform, the company's operational efficiency continues to improve.
Since the company launched the IPD reform in 2019, not only has revenue and profit continued to increase, but per capita output also increased significantly: from 2019 to 2021, the company's per capita income was 505/610/752 million yuan, respectively; per capita profit was 70/93/102 million yuan, respectively, proving the effectiveness of IPD reform.
2021 On the basis of IPD1.0, the company will continue to carry out the construction of the 2.0 version system, strengthen the company's business model optimization and the evolution of organizational capabilities, and provide further impetus for human efficiency.
At the same time, the company continues to improve its marketing network and carry out "sinking" services in typical industries.
Company continues the market sinking strategy of "deeply tapping demand and promoting from top to bottom", continues to build a marketing network covering the country, and gradually forms a four-level marketing system composed of headquarters, regions, provincial offices, and urban nodes, greatly enhancing the sales capabilities of "replicable" products.
Company already has 140 marketing outlets. Because the outlets have localization advantages, they can open up the "last mile" between products and users. In the first half of the year, the company's foreign-Beijing revenue contributed 594 million yuan.
localized outlets open the "last mile" between products and users, and have been tested in many industries such as emergency management and natural resources, with remarkable results, as shown in the table below. With the acceleration of the development of remote sensing technology and the demonstration role of typical government-level project results, the market-oriented application demands in various industries have gradually emerged, such as finance, oil, electricity, agriculture, etc.
's perfect marketing network layout is conducive to timely grasping user needs and extending mature products and services to a deeper market. At the same time, the company proposed the concept of regional management coordination, and will regionalize and modularly manage the marketing network, comprehensively improve regional technical support, plan planning, project research and other capabilities, and improve communication management efficiency and effectively control sales costs.
6. Profit forecast and valuation analysis
.1 Profit forecast
1) Revenue split and gross profit margin
Space infrastructure planning and construction business: Considering the second half of the 14th Five-Year Plan, my country will continue to have satellite launch plans, and the company's absolute leading advantage in civil remote sensing satellite ground application systems is difficult to shake. We expect the revenue growth rate of 5%/10%/8% in 2022-2024 will be 49.5%/49.0%/48.5% respectively.
PIE+ Industry: remote sensing satellite application has a large number of fields for deep digging. Following the special project of natural disaster wind, demand for real-life three-dimensional, digital villages, water conservancy and other fields has gradually emerged, and the company has established a complete four-level marketing system, which will help to enter the high-growth track as soon as possible.
We expect the year-on-year revenue growth rate of the PIE+ industry from 2022 to 2024 will be 55%/40%/32% respectively. New expansion industries have invested a lot in the early stage of construction, but with the promotion and popularization of the company's mature products, it is expected that the gross profit margin will rise from 2024, and the gross profit margins in 2022-2024 are expected to be 51.0%/51.0%/51.5% respectively.
Cloud Service:
Future growth is mainly reflected in:
First, with the increase in industries that can be covered by remote sensing applications, combined with the top-down business promotion model, the benchmark project will be promoted and copied to increase the number of customers.
Second, it enhances professional service capabilities for each industry, so that satellite data applications have the ability to industrialize, drives the increase in the number of businesses in each industry and widens the business scope.
Emerging application scenarios in multiple fields and across industries are being born at the same time, such as water conservancy digital twins, space weather, etc.
Company has set high goals for cloud business during equity incentives, that is, based on cloud business revenue in 2021, the CAGR of cloud business revenue from 2022 to 2024 will not be less than 70%. We expect the year-on-year revenue growth rate of cloud service business in 2022-2024 will be 120%/100%/80%, and the gross profit margin will be 72.0%/75.0%/75.0%/75.0% respectively.
2) Expense assumption
Considering the company's vigorous layout on the marketing network, the number of sales personnel and sales expenses are expected to continue to grow rapidly, and the sales expenses are expected to be 10.8%/11.0%/11.4% in 2022-2024, respectively; the growth of management expenses is relatively stable, and with the rapid growth of revenue, the proportion is declining year by year. It is expected that the management expenses rate will be 10.8%/10.0%/9.5% in 2022-2024 will be 10.8%/10.0%/9.5% in 2022-2024; in terms of R&D, the company will continue to recruit professional talents to strengthen its core competitiveness. It is expected that the growth of R&D expenses is basically synchronized with revenue. It is expected that the R&D expenses rate will be respectively 13.8%/13.5%/13.6%.
3) Profit forecast
After our above analysis, it is expected that the company's operating income in 2022-2024 will be 2.23/3.13/4.18 billion yuan, a year-on-year increase of 51.6%/40.4%/33.6%; the expected net profit attributable to shareholders will be 286/420/585 million yuan, a year-on-year increase of 43.0%/46.9%/39.2%.
.2 Summary
We select Zhongke Star Map (mainly engaged in digital earth business, its business covers aerospace data acquisition, processing, and application, and has a high degree of overlap with the company's business); 4-dimensional map new (leading in digital maps, the same field of geographic information application as the company, and is also promoting cloud transformation); Beidou Star Tong (providing products and solutions around Beidou satellite applications, and its business attributes in satellite applications are similar to those of the company) as a comparable company, the above-mentioned companies' average PE in 2023 is 40x.
We give Aerospace Hongtu an average valuation of comparable companies in 2023. According to our profit forecast, the company's net profit attributable to shareholders in 2023 is 420 million yuan, corresponding to a target market value of 16.8 billion yuan, which has 27% upside compared with the current market value.
7. Risk warning
1) The risk of high accounts receivable and weak operating cash flow.
Company's accounts receivable turnover days from 2019 to 2021 were 287/264/233 days respectively, and there is a positive trend.
However, since the company's main customers are government departments, research institutes, state-owned enterprises or special fields, affected by its fiscal budget, internal payment approval procedures, etc., the payment cycle is long and the collection is slow, which puts great pressure on the company's operating cash flow. From 2019 to 2021, the company's net cash flow was -141/0.75/-119 million yuan, respectively, which were significantly lower than the net profit in the same period.
Although most of the final customers have good reputation, if the macroeconomic environment fluctuates, the customers cannot obtain financial appropriations, delay payment or failure to pay related funds will have an adverse impact on the company's operating performance.
2) Policy support does not meet expectations.
The country has formulated a series of policies and regulations to encourage the development of satellite application industry, and to drive the market demand for remote sensing image processing software products through the regulatory mechanism of government procurement. If the relevant policies weaken their support for industry development, delay their implementation, and there are deviations in policy implementation in some areas, it will affect the company's operations and performance.
3) The actual benefits of the SAR remote sensing satellite project did not meet expectations.
Currently, SAR remote sensing satellite data in my country is relatively scarce, but if the country accelerates the SAR satellite launch process in the future, it will strengthen industry competition to a certain extent, thus causing the project to face certain market risks after implementation. In addition, after the project is completed, new depreciation and amortization will be added, which will cause a drag on performance.
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