In the first three quarters of 2003, the net profit of homing increased by 204.25% compared with the same period last year, maintaining the "buy" rating company to release the third quarterly report of 2023, with revenue of 506 million yuan, an increase of 114.06% over the same period last year, and a net profit of 41 million yuan, an increase of 204.25% over the same period last year. Of this total, 23Q3 achieved an income of 145 million yuan, an increase of 156.97% over the same period last year, and a net profit of 11 million yuan, an increase of 150.42% over the same period last year.

The production and operation of the company is good, and we expect the company to achieve a net profit of RMB 1.93 million in 2023-2025, corresponding to a PE of 344 million yuan, which is respectively times that of 40-30-22. According to the consensus expectation of Wind, the 24-year average PE of the comparable company is 38X. As the company's military trade business has entered a stage of rapid development, with a rich range of new products and a strong momentum of subsequent growth, the company is given a 24-year PE 40X, corresponding to a target price of 30.40 yuan (the previous value is 28.50 yuan), maintaining a "buy" rating.

The gross profit margin and net profit margin increased significantly, and the expense rate decreased significantly.

The company achieved rapid growth in revenue and profit in the first three quarters, mainly due to an increase in product delivery compared with the same period last year. In terms of gross profit margin, the company's overall gross profit margin in the first three quarters was 27.83%, an increase of 2.18pct over the same period last year, and a gross profit margin of 27.48% in the third quarter alone, an increase in 2.03pct over the same period last year. The increase in gross profit margin is mainly due to the increase in the company's share of military trade revenue. In terms of expense rate, the company's expense rate in the first three quarters was 24.68%, a decrease in 26.90pct compared with the same period last year, mainly due to a significant increase in company revenue and a decline in the proportion of various expenses. In the first three quarters, the company's sales expenses increased by 12.01% compared with the same period last year, management expenses increased by 8.26%, and R & D expenses increased by 16.82% year-on-year.

With the increasing demand for global air defense early warning radar, the company has a rich product reserve in the face of global military conflicts, and the international environment is complex and changeable. many countries urgently need to build air defense forces, and the demand for air defense early warning radar is more urgent. At the same time, with the steady improvement of China's international status, the rapid development of national defense military industry and the continuous improvement of the performance of air defense early warning radar equipment, the competitiveness of China's air defense early warning radar in the international market is increasing year by year. The arms trade export of radar equipment will usher in a good opportunity for development. In recent years, the company has seized the opportunity of the development of the military trade market and actively promoted its business expansion. In the first half of 2023, the company's military trade business has achieved an income of 110 million yuan. Previously, the multi-type air defense early warning radar developed and produced by the company according to the needs of foreign users for export has become a new growth point of the company.

Multi-domain layout, continuous expansion of growth points

In recent years, with the increase of military customers' plans for the development of new models of products, the company has won the bid for a number of new air defense early warning radar development projects. We believe that the future growth points of the company are as follows: (1) the old model products continue to contribute revenue, at the same time, the company mainly has long-term maintenance equipment and spare parts demand for in-service products; (2) the revenue growth brought by the future stereotyping and batch production of new model products; (3) the military trade business is gradually developing, and the company has a number of military trade models in production, and the military trade business will also become an important source of revenue growth in the future. (4) the company is also actively arranging new business areas such as air traffic control radar. In the future, with the gradual landing of related products, it will also become the company's revenue growth point, medium-and long-term development worry-free.

Risk Tip: product price reduction risk, military trade business is less than expected risk.