Baosight(600845)2025-04-14 01:32Summary of Shanghai Baosight Software (600845.SS) Conference Call Company Overview - Company: Shanghai Baosight Software - Ticker: 600845.SS - Industry: Software and Automation for Manufacturing, particularly in the Steel Industry Key Financial Results - 4Q24 Results: - Revenue: Rmb3,888 million, down 5% YoY - Gross Profit: Rmb1,226 million, down 4% YoY - EBIT: Rmb348 million, down 41% YoY - Net Income: Rmb335 million, down 51% YoY - Gross Profit Margin: 32%, flat YoY - Operating Profit Margin: 9%, down 5 percentage points YoY - Net Profit Margin: 9%, down 8 percentage points YoY - All figures missed Goldman Sachs estimates by 7% to 53% [1][2][8] Related-Party Revenue - 2024 Related-Party Revenue: Rmb6,916 million, down 5% YoY, missing prior guidance by 39% [1][6] - 2025 Guidance: Targeting Rmb10,200 million in related-party revenue, indicating a 10% decline from 2024 [2][6] Industry Outlook - Steel Industry Investment: Continued uncertainties expected, with depressed capacity utilization and margins forecasted for 2025 [2] - Steel Demand: Anticipated to stabilize YoY after a prolonged contraction since 2021 [2][3] Revised Financial Forecasts - Net Income Forecasts: Revised down by 12-14% for 2025-2030 to reflect current results and industry outlook [2][7] - New Revenue Estimates: - 2024: Rmb13,644 million - 2025E: Rmb15,286 million - 2026E: Rmb17,091 million - 2027E: Rmb19,529 million - 2028E: Rmb22,269 million - 2029E: Rmb25,496 million - 2030E: Rmb28,996 million [7] Investment Thesis - Growth Drivers: - Increased spending on production software to enhance manufacturing efficiency - Continued consolidation in the steel industry by Baowu Steel Group - Proven track record of expanding into new markets and customers - Risks: - 51% of revenue from related-party transactions, exposing the company to fluctuations in spending from Baowu [10][11] Valuation - 12-Month Price Target: Rmb28.5, based on a 27X 2026E PE discounted back to 2025E with a 10.5% cost of equity [2][11] - Current Price: Rmb28.46, indicating a minimal upside of 0.1% [12] Conclusion - The company is rated as Neutral, reflecting a fair valuation compared to peers in the China Industrial Tech sector, with significant reliance on related-party revenue and a challenging outlook for the steel industry [10][11]