Core views:
Incident: The company released its 2023 annual results report. In 2023, the company achieved operating income of 2.104 billion yuan, an increase of 44.69%; achieved net profit of 185 million yuan, an increase of 1.15% year on year; realized net profit deducted from mother of 159 million yuan, a year-on-year decrease of 5.82%.
Comment: The company's revenue increased 44.7% year on year in '23. Downstream demand remained high, and demand in new fields continued to grow. According to the company's performance report, according to estimates, 23Q4 achieved revenue of 393 million yuan, down 15.29% year on year and 25.76% month on month; 23Q4 achieved net profit of 0.18 billion yuan, down 62.55% year on year and 64.11% month on month. On the revenue side, the company's downstream domestic market is growing steadily, demand for foreign commercial aero engines continues to recover, and the company has achieved significant growth in stock and incremental international and non-aviation customers. Demand in the gas turbine sector has increased and sales have increased. At the same time, production capacity of Deland Aerospace's subsidiary has gradually been released, and manufacturing capacity continues to be strengthened. On the profit side, the company actively adopted cost reduction and efficiency measures to cope with factors such as inventory removal and cost reduction by downstream customers in the second half of the year, and enhance the competitiveness of the company's product market. At the same time, if the company's equity payment fee of 83.4053 million yuan is excluded, the company achieved net profit of 257 million yuan in 23, an increase of 14.5% over the previous year. Overseas business continues to be booming, and the company's first-mover advantage in overseas markets is obvious. According to the company's investor relations activity record sheet on February 2 this year, the company signed 3-7 year long-term agreements with a number of international aviation customers in 2023, which greatly increased its share compared to the past, while actively expanding the field of non-airline customers. The company accounts for more than 30% of overseas revenue in 2023, and is expected to account for about 40% of overseas business revenue in 2024. With the recovery of the global civil aviation market, the company is expected to benefit from strong demand in the foreign trade business sector with a strong first-mover advantage.
Profit forecast and investment advice: The company's EPS for 23-25 is expected to be 1.26, 2.18, and 3.04 yuan/share, respectively. Considering the modernization needs of high-end equipment, the recovery in foreign trade, and the steady increase in downstream prosperity in new fields such as gas turbines, compounding the company's first-mover advantage and production capacity expansion, we gave PE 20 times in 24 years, corresponding to a reasonable value of 43.59 yuan/share, maintaining a “gain” rating.
Risk warning: fluctuating raw material prices; low delivery expectations; policy adjustments, etc.