The target price was lowered to 57.97 yuan to maintain the “increase in holdings”. The company has benefited from the boom in the aerospace industry. The product business structure is constantly being upgraded, domestic and international markets are making simultaneous efforts, continuing to promote strategic collaboration, and performance is expected to remain high. Considering the fluctuation in the pace of downstream demand, we lowered the 2023-25 EPS to 1.58/2.00/2.49 yuan (previous value was 1.67/2.16/2.75 yuan) and lowered the target price to 57.97 yuan (previous value was 62.18 yuan) to maintain the “increase” rating.
The performance is basically in line with market expectations, and profitability continues to improve. 1) In 2023, the company achieved revenue of 20.072 billion yuan (+26.73%), net profit of 3.341 billion yuan (+22.27%) after deducting non-net profit, which is basically in line with market expectations; 2) Profitability continued to increase in 2023, with a weighted average return on net assets of 17.68%, an increase of 0.86pct over the same period last year; 3) We believe that the company will benefit from high downstream prosperity, promote strategic collaboration, focus on improving quality and efficiency, and make every effort to explore new possibilities and strengthen cost management during the “145th” period The compound profit growth rate is expected to exceed 30%.
Accelerate the construction of modern production capacity and coordinate international and domestic markets. 1) The company's business structure has been upgraded at an accelerated pace, military products are focusing on improving the ability to solve interconnection solutions, continuously increasing investment in research and development of new products, continuously promoting the upgrading of manufacturing capacity, and stabilizing the leading position of military connectors; 2) Civilian products have further increased production capacity and consolidated their advantages in new fields. Data centers, petroleum equipment, photovoltaic energy storage and other fields have achieved rapid growth, and invested 2.72 billion yuan to build high-end interconnected technology industry community projects to enhance R&D and production capacity for products such as optical transmission, microwave photonics, and liquid cooling. The NEV business focuses on the “international first-class, domestic mainstream” strategy. The coverage rate of mainstream car companies continues to increase, and multiple projects have been targeted throughout the year; the international layout continues to accelerate, the “big customer+region” market development model has been implemented, and the supporting role of global platforms is gradually showing.
Catalysts: Rapid development of components and new products, and continuous breakthroughs in the new energy business.
Risk warning: Downstream demand falls short of expectations, and the consumer goods competition pattern worsens.