20231030-招银国际-广联达-002410.SZ-Sector_headwinds_continue_to_impact_growth_6页_978kb

Glodon (002410 CH) Report Summary

Financial Performance Overview

Glonod's Q3 2023 results show revenue growth of just 1% year-over-year to RMB1.71 billion, missing analyst and consensus estimates of RMB1.89 and RMB2.00 billion. Net income plummeted 94% YoY to RMB13.4 million, primarily due to soft revenue growth and increased R&D investments. For the first nine months of 2023, revenue increased 7% to RMB4.78 billion, but net income declined 58% YoY to RMB278 million, reflecting persistent headwinds from the housing and construction markets.

Key Business Segments

• Construction Costing: Revenue rose 6% YoY to RMB1.3 billion (77% of total revenue), driven by SaaS growth of 15% to RMB963 million. However, new contract value signed in Q3 dropped 13% YoY to RMB968 million due to reduced digital spending amid sector downturns.
• Construction Management: Revenue fell 26% YoY to RMB291 million in Q3 (17% of total revenue), affected by declining housing starts and budget constraints. The company is focusing on quality growth through higher-margin products and project optimization.
• Expense Management: Higher S&M/R&D expenses (up 20/49% YoY) contributed to a net margin drop to 0.8% YoY, but cost controls are in place, with expected margin recovery from Q3.

Revised Forecasts and Valuation

Analysts lowered FY23-25 revenue estimates by 6-8%, with FY23 net income trimmed by 27% based on reduced growth outlook. Target price cut to RMB29.75 from RMB45.10, reflecting a 6.0x EV/Sales multiple, but the stock trades below long-term averages with a 52.6% downside potential from current levels. Forward PE and PS ratios are 2 standard deviations below their 3-year averages.

Analyst Recommendation

Maintain BUY rating for potential 12-month returns exceeding 15%, citing leadership in China's digital construction market and expected earnings acceleration in FY24. However, financial metrics indicate higher risk.

Financial Snapshot

• Margins: Gross margin declined to 82.6% in 2025E, while operating profit margin was forecast at 15.9%. Net margin improvements are expected, bottoming out in 2023.
• Valuation Metrics: EV/Sales ratio fell to 2.5x for FY25E, compared to SaaS peers averaging higher valuations, with a focus on safety margin due to current depressed PE and PS levels.