What happened: the company released its third quarter report in 2023. Revenue in the first three quarters of 2023 was 842 million yuan, down 6.72 percent from the same period last year. The net profit was 127 million yuan, down 9.45% from the same period last year.

Main points of investment

Contract liabilities soared 1806.49% year-on-year, operating cash flow is full: the company released its third quarter 2023 report. Revenue in the first three quarters of 2023 was 842 million yuan, down 6.72 percent from the same period last year, and the net profit returned to the parent was 127 million yuan, down 9.45 percent from the same period last year. The main reason for the decrease in the company's net profit was the compensation income from the demolition of the parent company's factory buildings in the same period in 2022. As of September 2023, the company's contract liabilities reached 358 million yuan, a substantial increase of 1806.49% over the same period last year, reflecting a substantial increase in the number of orders obtained by the company. The cash flow of operating activities reached 331 million yuan, an increase of 396.67% over the same period last year. The company is in good condition, which lays a solid foundation for subsequent capital increase and stock expansion and market development.

Participate in bidding for Goss Aerospace Capital increase and share expansion project, optimistic about satellite R & D and design capabilities and intelligent manufacturing business market: the company issued an announcement on August 23, agreed to invest 30 million yuan with its own funds to participate in the Shanghai Goss Aerospace Technology Co., Ltd. capital increase and share expansion project. In recent years, with the rapid development of low-orbit high-density micro-satellite constellation network driven by demand traction and technological innovation at home and abroad, satellite Internet has been brought into the scope of the country's "new infrastructure", and the company has always been committed to investing in science and technology enterprises. This participation in the Goss Aerospace capital expansion project is mainly based on the very good development prospects of the satellite Internet industry, which will help to promote the sustainable development of the company and enhance the staying power of development.

Intelligent mechanical and electrical leading enterprises are expected to benefit from the high prosperity downstream: the company ploughs the special equipment business, the main products include mechanical and electrical integrated management system, special military high-frequency switching power supply, special motor control system, vehicle oxygen supply device and related application software, which are widely used in the military field and have accumulated rich experience and manufacturing technology. The company arranges military products ahead of time and participates in pre-research and scientific research of key model projects of the whole army for a long time. Its R & D level and production scale occupy a leading position in the same industry, and its downstream customers are stable and sticky, and its performance is highly stable. in the future, it is expected to benefit from the rhythm of downstream weapons and equipment upgrading.

Profit forecast and investment rating: the company's performance is in line with expectations. China is in the stage of accelerated development of national defense information, and the demand for intelligent mechatronics is expected to be strong. In addition, Galaxy Electronics has been ploughing the intelligent mechanical and electrical field for many years, and based on the company's leading position in the industry, it is expected to benefit from the downstream volume. We maintain the forecast of the company's 2023-2025 homing net profit of 298 million yuan for each of 2.31 plus 266 PE, corresponding to a multiple of 25-22-19, and maintain a "buy" rating.

Risk tips: 1) special equipment price review risk; 2) raw material price fluctuation and insufficient supply risk; 3) market competition aggravates risk.