Report summary:
The company has a complete range of product models and steady growth in business performance. The company is mainly engaged in R&D, production and sales of high-performance transmission cables and components, photoelectric systems and FC products for national defense and military use. The company adheres to independent research and development to achieve internationalization and replace imports. Its products are widely used in the five major military fields of aerospace, aviation, ships, military electronics, and weapons. Judging from the revenue structure, high-performance transmission cables and components are the company's largest business sector, with revenue reaching 797 million yuan in 2022, accounting for 72.99% of total revenue; optoelectronic systems and FC products are the company's second largest business sector, and revenue and profit are growing rapidly. With the continuous development of mass production and upgrading of equipment and research and development of next-generation equipment, high-speed, high-reliability, lightweight and integrated communication technology is being applied more and more widely in the military equipment industry. Optoelectronic integrated communication technology has been further applied, and the market size of products such as optoelectronic cables, optoelectronic components, optoelectronic system integration, and optical fiber networks continues to grow, and the company is expected to open up more market space in the future.
Deeply involved in the field of cables and components, the release of equipment has driven a rise in downstream demand. Since its establishment, the company has focused on military and civilian cable products. At present, it has formed a complete product system. It is widely used in aviation (military aircraft such as fighter jets, helicopters, transport aircraft, early-warning aircraft, drones, etc.), aerospace (rockets, satellites, missiles, manned spacecraft, etc.); ships (surface, underwater ships, various auxiliary ships, etc.), electronics and equipment (communication, radar, electronic warfare, navigation, etc.), civil (rail transit, railway construction, commercial aircraft, 5G communication, etc.) markets, breaking the high performance of foreign companies A long-standing monopoly in the transmission cable sector. At present, compared with developed countries such as the US, there is a lot of room for addition in terms of quantity. Advanced domestic military aircraft represented by the “20 series” have entered the mass production and assembly stage, which has spawned a large demand for their aviation cable components. At the same time, with major breakthroughs in domestic civil aviation aircraft development, the company is expected to continue to benefit as a supporting enterprise.
Acquire Shanghai Saige to boost FC business and create a second performance growth point. Compared with traditional copper cables, FC optical fiber bus technology has the advantages of high transmission rate, good protocol compatibility, long transmission distance, resistance to electromagnetic interference, good confidentiality, and resistance to nuclear radiation, as well as light weight and small size, and can adapt to high-speed, high-volume, reliable and effective information communication and processing requirements. At present, FC optical fiber bus technology has been widely used in military fields such as next-generation avionics systems, radar signal processing and transmission, network computing and storage, and airboard/carrier/vehicle equipment data communication, etc., and has become the main development direction of military avionics system network technology.
Investment suggestions: We adjusted our profit forecast according to the three-quarter report. We expect the company's revenue for 2023-2025 to be 1,252/14.58/1,691 billion yuan, net profit of 2.28/2.64/305 million yuan, corresponding to EPS of 0.73/0.85/0.98 yuan, corresponding to PE 20.96/18.11/15.72X, maintaining the “buy” rating.
Risk warning: raw material prices fluctuate, competition intensifies, profit forecasts and valuations fall short of expectations