The company's results in the first three quarters of 2023 are in line with market expectations
The company announced its results for the first three quarters of 2023: revenue in the first three quarters was 3.623 billion yuan, + 7.69% compared with the same period last year; net profit was 844 million yuan, + 25.84%; and non-net profit was 801 million yuan, + 22.04% over the same period last year. In a single quarter, 3Q23 achieved revenue of 1.21 billion yuan, year-on-year + 13.67%, month-on-month + 4.28%; return-to-mother net profit 293 million yuan, year-on-year + 50.06%, month-on-month + 35.07%; deduction of non-net profit 260 million yuan, year-on-year + 39.90%, month-on-month + 20.64%. The company's performance is in line with market expectations.
Trend of development
Aviation new materials business has grown steadily and its profitability has improved steadily. 1) from the perspective of business areas, the company achieved revenue of 3.552 billion yuan in new aviation materials in the first three quarters, YoY+6.97%, mainly in aviation composite raw materials and carbon material brake products sales growth; machine tool equipment business revenue of 43 million yuan, YoY+17.50%, mainly special equipment aviation parts processing increased compared with the same period last year. 2) driven by the company's cost control and the decline in the labor cost of redundant personnel, the company's gross profit margin / net profit margin in the first three quarters were + 4.46ppt/+3.54ppt to 37.68% and 23.43% respectively compared with the same period last year, and its profitability increased steadily.
During this period, the cost control is stable, and the continuous high level of R & D investment enhances the core competitiveness. 1) during the first three quarters of the company, the expense rate was from + 1.14ppt to 10.29% compared with the same period last year. Affected by the increase in employee salaries and product insurance premiums, the management expense rate and sales expense rate were 0.60% from + 0.55ppt/+0.01ppt to 7.11%, respectively. 2) the company's R & D investment increased by 35.59% to 114 million yuan over the same period last year, and the R & D expenditure rate increased from + 0.65ppt to 3.16% compared with the same period last year. We believe that the company actively promotes the verification process of self-research materials, carries out the research on the unified type of aramid paper honeycomb products, and focuses on the research and development of leaf spring, composite display console, sandwich structure and other projects, which lays the foundation for the industrialization of non-aviation products.
Continue to strengthen industrial capacity building, annual performance targets demonstrate the company's confidence. 1) according to the company announcement, the company has vigorously promoted the verification of the new prepreg production line, two new prepreg production lines in a park in Shunyi District, Beijing have reached a stable production state and achieved design capacity; in terms of honeycomb business, by giving full play to regional advantages, realize the linkage of north-south production lines and promote balanced honeycomb production. 2) the company announces the establishment of standardized process documentation system and PCD control around raw material quality consistency control and material production process control. We believe that the steady improvement of product quality can be achieved and annual delivery tasks such as prepreg can be guaranteed. 3) the company announced that it aims to achieve revenue of 4.9 billion yuan in 2023, an increase of 10.21% over 2022, and a total profit of 1.176 billion yuan, an increase of 31.54% over 2022. We believe that the performance target demonstrates the company's confidence in growth, and the leading position of aviation prepreg continues to be consolidated.
Profit forecast and valuation
We maintain the 2023 / 2024 net profit forecast of 1.02111337 million yuan. The current share price corresponds to 2023 Universe 25.6x Pax E in 2024. We maintain the outperform industry rating and maintain the target price of 30.82 yuan, corresponding to 2023 Universe 42.1Compact 32.1x P Universe E in 2024, with a potential increase of 25.3%.
Risk
1) fluctuations in product prices; 2) orders and deliveries are not as expected.