The company's 2023H1 operating income decreased by 94% compared with the same period last year, and the company's net profit decreased by 59% compared with the same period last year. The company released a half-year report for 2023, achieving an operating income of 8.69 million yuan, a decrease of 94% over the same period last year, mainly due to the influence of external environmental factors, the postponement of the production plan of the company's superior supporting units, and the substantial reduction in the sales of inertial navigation systems in this period. The net profit of returning to the mother was 14.36 million yuan, down 59% from the same period last year, mainly due to the decrease in the sales volume of inertial navigation system products in this period compared with the same period last year.
Important progress has been made in a number of R & D projects: during the reporting period, R & D expenditure reached 14 million yuan, an increase of 40% over the same period last year, mainly due to the increase in labor costs caused by the increase in the number of important scientific research personnel in the company and the continued increase in R & D investment in new products and technologies; the company has made fruitful scientific research achievements, has made a number of R & D progress, and the core competitiveness has been continuously improved.
The performance inflection point is expected to come, and the company has great upward flexibility: with the acceleration of China's weapons and equipment arrangement and localization substitution process under the background of the "14th five-year Plan", and the reshaping of the world arms trade market pattern by the Russian-Ukrainian War, Chinese military enterprises have ushered in new opportunities. The deterministic growth of the remote fire industry in the future will drive the coordinated development of the entire industrial chain. In the early stage, due to the influence of the large environment and the postponement of the production plan of the supporting units, the performance of the company has declined significantly in this period; considering the R & D and production links of inertial navigation in the company's remote fire industrial chain, in the later stage, with the expansion of production capacity, army equipment and foreign trade, the company's performance inflection point is expected to come, with great upward flexibility in the later stage.
The company's buyback shows long-term development confidence: according to a notice issued by the company on August 17, 2023, Chairman Wang Bo proposed to the company's board of directors that based on the confidence in the company's future sustainable development and a reasonable judgment on the company's long-term value, in order to improve the company's long-term incentive mechanism, it is suggested that the company should buy back shares at a price of no more than 100 million yuan and no more than 71 yuan per share (inclusive). It will be used for employee stock ownership plan or equity incentive plan at the right time in the future.
This move shows the management's confidence in the restructuring of the company's long-term and healthy development, and can effectively improve the company's long-term incentive mechanism.
Inertial navigation system core supplier, remote fire industry chain important target core logic: first, good industry: inertial navigation system is the core and key technical products of modern national defense system, which is widely used in a variety of military fields and has a large long-term development space; ammunition as a military industry "consumables", a variety of strategic missiles, tactical missiles, medium-and short-range ammunition need to use inertial navigation "standard" products Second, card core: the company's inertial navigation products are leading in China, the product barriers are high, the research and development is difficult, and the products are the key parts of the remote fire system, with high value and small substitutability; third, strong background: as an incubator of the Beijing Institute of Technology, the company has been deeply engaged in the industry for more than 30 years, and has technical advantages and first-mover advantages in a variety of developed products to effectively ensure long-term performance. Fourth, performance reversal: affected by the delay of the production plan of the superior supporting units, the company's income and profits declined, and the company's performance was highly flexible with the expansion of production capacity, army equipment and foreign trade in the later stage.
Profit forecast and valuation
Considering the possible postponement of the overall production plan and bidding of the industry chain, the company's revenue recognition may lag behind and is optimistic about the company's profit growth in 2024 / 2025. The company's profit forecast for 2023 is downgraded. It is estimated that the net profit from 2023 to 2025 will be 0.89 yuan 1.95 / 278 million yuan, up 60%, 119%, 43% PE, 44-20-14 times, and downgraded to "overweight" rating.
Risk warning: risks such as operation less than expected, single product structure, rapid change of technology, etc.