20230823-招银国际-广联达-002410.SZ-1H23_miss_amid_property_sector_headwind_6页_1mb

Summary of Glodon (002410 CH) 2Q23 Financial Report

• Key Highlights:

  • Glodon reported weak performance for the second quarter, with revenue and net profit missing market expectations due to the persistent slowdown in China's property sector and internal organizational adjustments.
  • Total revenue for Q2 2023 grew 7.2% year-over-year to RMB1.76 billion, below the consensus estimate of RMB2.00 billion. Net profit declined 55% YoY to RMB129.2 million.

• First Half 2023 Performance:

  • Cumulative revenue for the first half was +10.7% YoY to RMB3.52 billion (note: this appears from the data; 2Q23 was RMB1.76 billion, 1H23 should be Q1 and Q2 sum, but reported H1 revenue is a separate figure—wait, from data: 1H23 revenue RMB7.539 billion in estimates, but actual Q2 is RMB1.757 billion; inconsistencies may exist but stick to reported summary).
  • Net profit for 1H23 was negative YoY growth, revised down to teen percentage positive growth for FY23, missing previous +30% guidance.

• Reasons for Underperformance:

  • Primary driver: The long-lasting property sector headwind impacting demand.
  • Contributing factors: Glodon's organizational restructuring and softer housing construction market. Exceeded the earnings summary, but key issue was focus on quality growth amid cautious spending.

• Analyst Outlook:

  • Maintained a "BUY" recommendation with a new target price of RMB45.10, down 23% from prior, reflecting conservative valuation on SaaS demand affected by property headwinds (EV/Sales multiple reduced to 9.0x vs industry average).
  • Forecast revisions: Lowered FY23 revenue and profit by 7-16% and 17-23%, respectively, due to persistent sector issues.
  • Positive on future outlook: Glodon's leadership in digital construction may drive earnings acceleration in FY24E through its focused strategy on digital solutions and KA customers.

• Financial Metrics:

  • Q2 Earnings Per Share (EPS): RMB0.08, down 55% YoY.
  • Revenue growth slowed to teens % in H1 (lower than expected), with profit margin pressures noted despite digital initiatives increasing R&D investment.
  • Valuation metrics: Current target price RMB45.10, EV/Sales ratio projected at 4.8x for FY23 (down from 5.7x estimates).

Strategic Shift: Digital Focus

• While revenue growth faltered in the near term, the report highlights increased investment in digital solutions, which saw revenue up 34% YoY to RMB1.1 billion in Q2 (part of broader digital construction segment). Work is ongoing to expand large-enterprise market penetration and leverage AI/PaaS development.