NORTHKING TECH(002987) 国泰君安·2024-10-29 07:45Investment Rating - The report maintains a "Buy" rating for the company with an updated target price of 25.00 CNY [2][6]. Core Insights - The company's gross margin has improved quarter-on-quarter, leading to a return to profit growth in the latest quarter. For the first three quarters of 2024, the company achieved a revenue of 3.436 billion CNY, a year-on-year increase of 10.05%. In Q3 alone, revenue reached 1.192 billion CNY, up 8.47% year-on-year, aligning with expectations. The net profit attributable to shareholders for the first three quarters was 226 million CNY, down 9.34% year-on-year, but the decline has narrowed compared to the first half of the year. Notably, Q3 net profit was 106 million CNY, reflecting a year-on-year growth of 7.15% [2][6]. Financial Summary - Revenue and Profit Forecasts: - 2024E Revenue: 4.754 billion CNY, a growth of 12.1% from 2023A - 2025E Revenue: 5.439 billion CNY, a growth of 14.4% from 2024E - 2026E Revenue: 6.208 billion CNY, a growth of 14.1% from 2025E - 2024E Net Profit: 339 million CNY, a decrease of 2.4% from 2023A - 2025E Net Profit: 408 million CNY, a growth of 20.2% from 2024E - 2026E Net Profit: 474 million CNY, a growth of 16.3% from 2025E [3][11]. - Earnings Per Share (EPS) Forecast: - 2024E EPS: 0.55 CNY - 2025E EPS: 0.66 CNY - 2026E EPS: 0.77 CNY [2][3]. - Valuation Metrics: - The average PE ratio for comparable companies in 2025 is projected at 37.87 times [2][12]. Industry Context - The banking sector, particularly state-owned banks, is experiencing a slowdown in IT spending growth, coupled with increased project implementation challenges due to intensified competition. Despite these pressures, the company has successfully reversed the trend of declining gross margins through improved internal management. The gross margin for Q3 was 24.59%, reflecting a quarter-on-quarter increase of 2.40 percentage points, which was a key driver for the net profit margin increase of 2.53 percentage points [2][6]. - The report suggests that industry profit margins have likely bottomed out, with the company positioned to lead a recovery in profitability as competitors adopt more conservative operational strategies [2][6].