Incidents:
On April 25, 2023, the company released the 2022 annual report and the first quarter of 2023 report. In 2022, the company achieved operating income of 681 million yuan, down 1.47% from the previous year; achieved net profit of 13 million yuan, down 68.19% from the previous year; achieved net profit of 102 million yuan after deduction, a decrease of 93.94% over the previous year; and basic earnings per share were 0.03 yuan, down 82.77% from the previous year. Achieved operating income of 170 million yuan in the first quarter of 2023, an increase of 47.55% over the previous year; realized net profit of 0.05 million yuan, an increase of 23.30% over the previous year; realized net profit of 2.967 million yuan after deduction of net profit of 2.967 million yuan, a decrease of 12.78% over the previous year; and basic earnings per share were 0.01 yuan, a decrease of 27.92% over the previous year.
The 22-year results declined due to the influence of the macro environment
In 2022, due to the impact of the worsening macro environment on the supply chain, the company's official law enforcement boat revenue fell 28.87% year on year, but the amount of new tax-free orders increased 84.98% year on year; new energy boat business revenue increased 271.34% year on year, and new contracts increased 52.99% year on year; special operation boat business revenue increased 90.21% year on year, and new contracts increased 18.56% year on year. The gross margin of the company's products was 16.84%, a year-on-year decrease of 18.16 pct. This was due to the large decline in gross margin of official law enforcement vessels. The company's operating situation in the first quarter was the same as the same period last year, and government subsidies contributed 10.82% of the current period's net profit.
In-hand orders are plentiful, and profitability is expected to gradually improve
According to the 22nd annual report, the amount to be fulfilled in major contracts signed in 2022 increased by 191.60% year-on-year. The 2023 quarterly report showed that in January-March 2023, the amount of new orders signed by the company and subsidiaries did not include tax of 1,592 million yuan. As of March 31, 2023, the amount of tax not included in the tax amount of 2,634 million yuan for the company and its subsidiaries. Large on-hand orders are expected to be gradually released to drive performance growth. The long-term downturn in the domestic shipbuilding industry has led to tight overall production capacity in the industry. In the future, as the industry segments to which the company belongs rise, the company is expected to continue to receive orders.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-25 to be 1,400/21.01/2,416 billion yuan, respectively, with a corresponding growth rate of 105.62%/50.13%/15%, respectively, and net profit of 0.73/1024/110 million yuan respectively. The corresponding growth rate is 454.27%/70.08%/-11.14% respectively, the three-year CAGR is 103.09%, and EPS is 0.19/0.33/0.29 yuan/share, respectively. Given that the company is a leading company in the segment, according to the relative valuation method, referring to the valuation of comparable companies, we gave the company 50 times PE in 2024, with a target price of 16.5 yuan, maintaining the “buy” rating.
Risk warning: Order sustainability falls short of expectations, production capacity is insufficient, and the development of new energy boats falls short of expectations