Steady growth in performance and short-term pressure on gross profit margin
In the first three quarters of 2023, the company achieved revenue of 2.266 billion yuan, year-on-year + 2.37% (adjusted), net profit of 308 million yuan, year-on-year + 2.06% (adjusted), non-return net profit of 298 million yuan, year-on-year + 4.92% (adjusted). Gross margin is 44.41%, year-on-year-1.14pct. From a quarterly point of view, Q3's single-quarter revenue was 885 million yuan, year-on-year + 5.21% (adjusted), return-to-mother net profit 99.7985 million yuan, year-on-year + 3.9% (adjusted), deducted non-return net profit 97.2813 million yuan, year-on-year + 3.53% (adjusted). Single-quarter gross profit margin is 42.61%, year-on-year-4.86pct, month-on-month-4.15pct.
Military communications equipment leading enterprises, continuous introduction of new products
The company is one of the earliest R & D and manufacturing enterprises of military wireless communication equipment in China, with complete scientific research and production qualification, including handheld, carrying, vehicle, airborne, shipborne, missile-borne and other series of equipment. to achieve a wide range of coverage from shortwave, ultrashort wave to satellite communications.
Through steady layout, the company has achieved a steady increase in the share of equipment in traditional fields, continuously expanding the number of users, and expanding the fields of scattering communication, individual communication, unmanned communication and big data application through competitive bidding. in addition, through the profound technology accumulation in recent years, the company's system research capacity has been greatly improved, realizing the development of new customers of a variety of system products in many fields, and expanding customer boundaries and product boundaries. In the future, it will gradually become the performance growth point of the company. In the first half of the year, the company won a number of data links, satellite communications and navigation and communication system-level products with excellent results.
Deep ploughing railway wireless communications, is expected to enjoy the 5G-R development dividend in the field of civil wireless communications, the company is China's railway wireless communication equipment designated enterprises and the main formulation of industry standards, self-developed wireless communication equipment has been successfully applied to "Fuxing", "Harmony" and other high-speed trains and new heavy-haul locomotives. It mainly includes railway wireless communication and urban rail transit wireless communication terminals and system products, and continuous iterative development according to the evolution of civil private network communication technology and user requirements.
In the first half of the year, the company completed the project "Research and Application of key Technologies of Broadband dispatching Communication in Public College Network of heavy-haul Railway", which broke through the current situation that it is difficult to integrate railway broadband mobile trunking service system and railway business. the research results have been applied in batch in heavy-haul railways such as Shuohuang Railway, Baoshen Railway of China National Energy Group, and Jingshen Railway of Shaanxi Coal Chemical Group. Promote innovation in the field of civil wireless communications and high-quality development of industry.
Profit forecast and valuation
China's national defense information construction continues to strengthen, and the military information construction is expected to develop rapidly. The company is a leading domestic military wireless communication enterprise, which is expected to enjoy the dividend brought by the high prosperity of the industry. We expect the company's 2023-2025 net profit to be 874 million yuan / 1.118 billion yuan / 1.347 billion yuan respectively, corresponding to the PE of 22x/17x/14x, given a "buy" rating.
Risk hint
The growth of military expenditure is not as expected; the investment in railway construction is not as expected; the risk of shareholder reduction