A leading military embedded computer company. Since its establishment in 2002, Zhimingda has been deeply involved in the R&D, production and sales of military embedded computer module products and technology. The company has participated in supporting research and development and production of key national weapons and equipment many times, and has a certain popularity in the military embedded computer industry.

The performance in 2023 was relatively good, and there were plenty of orders in hand. In 2023, Q1-Q3 achieved revenue of 399 million yuan, an increase of 15.52% over the previous year; realized net profit of 62 million yuan, an increase of 38.20% over the previous year, with significant profit growth. As of September 30, 2023, the company has in-hand orders of 550 million yuan (including oral orders). There are sufficient on-hand orders to support the company's future performance growth.

The company has a rich embedded computer product matrix, and applications in the field of space-borne applications may become a new growth point. The company's embedded computer module products can be divided into airborne, missile, shipborne, vehicle and other embedded computer modules according to different terminal application scenarios. Among them, applications in the airborne sector accounted for the highest proportion, accounting for 58.51% of the company's revenue. The company continues to expand application scenarios. Currently, the space-borne projects it undertakes are low-orbit communication satellites, mainly mission systems. In the future, they will gradually be mass-produced as downstream models are released, becoming a new growth point for the company.

The original fund-raising project is progressing steadily, and it is proposed that the new capital will continue to be used to enhance production capacity and R&D capabilities. The company's IPO in 2021 raised 436 million yuan, mainly for embedded computer capacity expansion projects and R&D center technology transformation projects. Currently, the construction of this fund-raising project is progressing steadily. According to the prospectus for issuing convertible bonds to unspecified targets issued by the company on October 24, 2023 (application draft), the company plans to issue convertible bonds to raise no more than 401 million yuan, mainly for embedded computer capacity expansion and supplementary investment and construction projects and R&D center upgrading projects, which are expected to continue to enhance the company's production capacity and R&D capacity.

Equity incentives fully mobilize enthusiasm and help the company grow in the long term. The company announced the 2023 restricted stock incentive plan in May 2023. It plans to grant no more than 255.75 million shares to 84 incentive recipients, accounting for 0.51% of the total share capital. The performance assessment goals are as follows: 1) 2023: Based on 2021 net profit, the net profit growth rate in 2023 is not less than 30%; or based on 2021 revenue, the revenue growth rate in 2023 is not less than 45%. 2) 2024: Based on 2021 net profit, the 2024 net profit growth rate is not less than 50%; or based on 2021 revenue, the 2024 revenue growth rate is not less than 70%.

Investment suggestions: We expect the company's revenue for 2023-2025 to be 6.76/8.59/1,057 million yuan, net profit of 1.22/1.58/195 million yuan, corresponding EPS of 1.62/2.10/2.59 yuan, corresponding to PE37.30/28.80/23.30X, respectively. First coverage, giving a “buy” rating.

Risk warning: Demand is falling, profitability is declining, and performance and valuation have fallen short of expectations.