Incident: Recently, the company released its 2023 annual report. In 2023, the company achieved operating income of 4.780 billion yuan, an increase of 7.50% year on year; realized net profit attributable to shareholders of listed companies was 1,031 billion yuan, an increase of 34.90% year on year; net profit attributable to shareholders of listed companies after deduction was 1,006 billion yuan, an increase of 33.63% year on year.
The new materials business grew steadily, and the equipment business reduced losses year on year. By business, the new aviation materials business achieved revenue of 4.671 billion yuan, an increase of 7.20% over the previous year, mainly due to the increase in sales of aviation composite raw material products and brake products in the current period; the equipment business achieved revenue of 66.1796 million yuan, mainly due to the year-on-year decline in machine tool products. The company achieved net profit of 1,031 billion yuan to mother, an increase of 34.90% over the previous year.
Among them: 1. The new aviation materials business achieved net profit of 1,097 billion yuan, an increase of 33.20% over the previous year, mainly due to changes in product structure, cost reduction and efficiency, and scale effects; 2. The equipment business realized net profit attributable to shareholders of listed companies - RMB 39.755 million, a year-on-year loss of RMB 2.808 million. The main reason for the loss reduction was due to the increase in the overall gross profit contribution of changes in the business structure and a decrease in labor costs for redundant personnel.
Increased profitability and continuous improvement of core competitiveness. In terms of profitability, the company's annual gross sales margin was 36.75%, +5.81 pct; the annual net sales margin was 21.71%, +4.45 pct year on year; profitability increased significantly. The company continues to focus on its main business to further consolidate the company's market position and technical advantages. The annual R&D expenses were 176 million yuan, +7.46% over the same period; in aviation industry composites, it continues to promote application verification of core products and industrialized application of new materials: 1. Complete the C929 front fuselage wall panel trial production verification (PPV) wall panel development; 2. Continuously promote research on the stability and process applicability of domestic high-performance carbon fiber pre-impregnation, and significant progress has been made; 3. Break through the key technology for preparing domestic high-performance carbon fiber pre-impregnation and complete the first delivery of a new type of carbon fiber pre-impregnation, 4. The “Sound-absorbing Honeycomb Composites and Their Application in Commercial Aero Engines” project breaks through automatic implantation, curved surface molding, and seamless splicing technology, laying the foundation for subsequent applications. At the same time, Premium Bermuda continues to promote the localized replacement of brake discs for civil aviation aircraft and the application and promotion of brake components for high-speed trains. In terms of production capacity, the company is currently developing a project to improve the production capacity of advanced aviation pre-impregnation, building a new advanced pre-impregnation production plant and multiple automated pre-impregnation production lines. After the project is put into operation, it will greatly enhance the company's production and delivery capacity and strongly support the achievement of the company's medium- to long-term development goals.
Steady growth is expected in 24 years, and the core business will continue to be strengthened. The company's target for the full year of 2024 is estimated revenue of 5 billion yuan (+4.60%) and total profit of 1,282 billion yuan (+5.69%).
By business, ① New aviation materials business (including civil product conversion business): The new aviation materials business strives to achieve revenue of 4.912 billion yuan, with a total profit of 1,370 billion yuan. ② Equipment business: The equipment business strives to achieve revenue of 73 million yuan and total profit of -15 million yuan. At the same time, the company also listed: ⑴ continuing to strengthen independent research and development of key core technologies, ⑵ promoting the verification of advanced pre-impregnation production lines, speeding up the construction of the first digitally intelligent pre-impregnation production line in China, and ⑶ strengthening industrial layout optimization and industrial resource allocation as main tasks.
Investment advice: The company is a leader in the field of aeronautical composites. The business is now entering a period of rapid development. Demand in the downstream market continues to rise, and it is expected to benefit from the progress of large domestic aircraft and the low-altitude economy. According to model estimates, the company's performance is expected to maintain steady growth. Net profit from 2024 to 2026 is expected to be 1,143 billion yuan, 1,356 billion yuan, and 1,616 billion yuan, respectively, and EPS of 0.82 yuan, 0.97 yuan, and 1.16 yuan respectively, corresponding P/E is 24 times, 20 times, and 17 times. Maintain a “buy” rating.
Risk warning: risk of macroeconomic fluctuations; risk of industry competition; risk of international market development; risk of product quality and production safety; downstream demand falling short of expectations.