Incidents:
The company released its 2022 annual report on April 18, 2023: full-year operating income of 413 million yuan, a year-on-year decrease of 13.23%; realized net profit of -46 million yuan, a year-on-year decrease of 539.45%; net profit returned to the mother after deduction - 0.5 billion yuan, a year-on-year decrease of 631.97%.
Comment:
The progress of the company's defense products has lagged behind, and profitability has declined. The company's gross margin in 2022 was 39.68%, down 6.9 percentage points from the previous year, and the net interest rate was -11.11%, down 13.3 percentage points from the previous year. On the cost side, the company's sales/management/finance rates were 6.58% /30.64/ 0.49% respectively, up 0.8/4.59/-0.23 percentage points over the previous year. The annual R&D investment was 694.8857 million yuan, accounting for 16.84% of revenue. The decline in the company's performance in 2022 was mainly due to the signing of some key model contracts, delays in the procurement process and acceptance of major projects, and unpricing of individual delivered products. At the same time, the company's equity incentives increased share payment fees, and reduced repayments from some customers led to an increase in bad debt preparations, which also led to a decline in net profit.
Airborne equipment business revenue declined, and aviation maintenance, measurement and control business grew steadily. In 2022, the company's airborne equipment business achieved revenue of 127 million yuan, a year-on-year decrease of 48.64%, accounting for 30.71% of the main business revenue, mainly due to delays in project initiation, contract signing and product delivery for some products. Currently, the company's orders have not been cancelled on a large scale, and it is expected that performance will be gradually realized in the future; the aviation maintenance business achieved revenue of 149 million yuan, an increase of 11.80% over the previous year, accounting for 36.20% of the main business revenue. The civil aviation maintenance business achieved good results; the measurement and control equipment development business achieved revenue of 109 million yuan, an increase over the previous year 43.66%, accounting for 26.33% of the main business revenue, and significant progress has been made in a number of important projects.
Actively promote emerging businesses and explore new momentum for performance growth. The company's intelligent asset management based on IoT technology such as RFID has achieved continuous small-batch production and stable delivery; integrated product development management software has been officially launched; SIPDM surpassed the integrated product development management information system has completed the development of the first industry version; composite product delivery and market expansion have been carried out in an orderly manner.
Investment advice: We expect the company's revenue for 2023-2025 to be 509/646/828 million yuan respectively, net profit of 0.74/1.06/142 million respectively, corresponding EPS to 0.29/0.42/0.56 yuan, corresponding to PE38.24/26.75/20.01X, first coverage and a “buy” rating.
Risk warning: downstream demand falls short of expectations, competition intensifies, profit forecasts and valuations fall short of expectations