Incident: The company released its 2023 annual report, achieving annual revenue of 46.247 billion yuan, an increase of 11.18% over the previous year; net profit to mother of 3.07 billion yuan, an increase of 30.47% over the previous year.
Net profit to mother grew by more than 30% throughout the year. Looking forward to continued growth in medium- to long-term performance in 2023, the company achieved operating income of 46.247 billion yuan (+11.18%), net profit to mother of 3.07 billion yuan (+30.47%), and net profit of non-return to mother of 2.91 billion yuan (+32.78%). The company's annual profit growth rate exceeded 30%, and the weighted ROE reached 20.96% (+2.61 pcts), the highest value in history, mainly due to the increase in the company's operating income and continued promotion of cost reduction and efficiency. Looking at a single quarter, 23Q4 achieved revenue of 11.616 billion yuan (+2.63%) and net profit to mother of 642 million yuan (+13.87%). The company's profit side has maintained rapid growth, reflecting its core competitiveness in the field of aviation defense.
In terms of profitability, the company's gross sales margin for the whole year was 10.95% (+1.00pct), net margin was 6.51% (+0.95pct), and the period expense ratio was 3.69% (+0.41pct). Among them, the sales expense ratio is 0.03% (-0.01pct); the management expense ratio is 2.17% (+0.02pct); and the R&D expense ratio is 2.11% (+0.33pct). The company's profitability has improved, and cost reduction and efficiency are already showing results.
In addition, the company's accounts receivable and notes at the end of the period were 9.42 billion yuan, up 170.2% from the beginning of the year, mainly due to an increase in sales products and an increase in acceptance notes not due at the end of the period; inventory was 11.649 billion yuan, down 4.3% from the beginning of the year; and prepayments were 9.29 billion yuan, down 29.85% from the beginning of the year, mainly due to the payment statements of prepaid suppliers in the previous period. It indicates that the company may be gradually shipping to guarantee the release of 24-year results.
The company predicted a significant year-on-year increase in the scale of related transactions in '24
On February 6, 2024, the company issued an announcement relating to related transactions. The actual daily related transaction volume of the company in 2023 was 55.485 billion yuan, an increase of 15.84% over the actual amount generated in 2022; the total amount of related transactions in 2024 is estimated to be 61,063 billion yuan, an increase of 0.94% year-on-year over the previous year's estimated amount of 60.494 billion yuan. Among them, the estimated amount of raw materials, fuel, power, etc. purchased from related parties totaled 24.623 billion yuan, an increase of 12.30% over the actual amount of 21.927 billion yuan incurred in 2023, mainly due to an increase in procurement volume.
The company issued a fixed increase plan to consolidate its core competitiveness as the “cradle of fighter jets.”
In December 2023, the company plans to raise no more than 4.2 billion yuan (including capital) through issuance to no more than 35 (inclusive) investors, including aviation industry groups and aviation investment. The number of A shares issued to specific targets does not exceed 5.60% of the total share capital of the company before the current offering, that is, no more than 154,319,172 shares (including the number of shares). The capital raised will be used for Shen Fei's partial relocation and construction project (to invest 1,922 million yuan), the composite material production line capacity building project (486 million yuan), the titanium alloy production line capacity building project (355 million yuan), the aircraft maintenance service guarantee capacity improvement project (393.3 million yuan), the repayment of special debts (100 million yuan), and supplementary working capital (943.7 million yuan). We believe that fixed growth is expected to enhance the company's aviation defense equipment research, manufacturing and maintenance capabilities, and enhance the company's core competitiveness.
Increase capital of Yangzhou Institute to improve business collaboration capabilities and enhance industrial synergy. At the beginning of 2023, the company obtained 34.12% of Yangzhou Institute (Shenyang Aircraft Design Institute Yangzhou Collaborative Innovation Research Institute Co., Ltd.) through a cash capital increase of 160 million yuan. The Yangzhou Institute is mainly engaged in the production and design of drones, general aviation, and airborne systems. On August 9, 2023, the Yangzhou Court obtained a “Notice of Registration” issued by the Yangzhou Guangling District Administrative Examination and Approval Bureau. The transaction has completed the registration procedure for industrial and commercial changes. The company's capital increase has strengthened the cooperative relationship between the two, further consolidating the company's leading position in the industry.
Profit forecast: The company is a leader in the field of aviation defense equipment, has strong core competitiveness, and is improving in the medium to long term. The company's net profit for 2024-2025 is estimated to be 37.30, 4.522, and 5.451 billion yuan, respectively. The corresponding EPS is 1.35, 1.64, and 1.98 yuan, and the corresponding PE is 26.88, 22.18, and 18.40 times, respectively, maintaining the “Highly Recommended” rating.
Risk warning: risk of untimely supply of supporting equipment, risk of R&D falling short of expectations, risk of aviation defense equipment budget reduction.