occurrences
Recently, the company released its 2023 annual report, achieving annual revenue of 1,040 billion yuan, an increase of 24.25% over the previous year, and realized net profit of 141 million yuan, an increase of 27.34% over the previous year.
reviews
1. In 2023, the company's performance achieved relatively rapid growth. The company achieved annual revenue of 1,040 billion yuan, an increase of 24.25% over the previous year. Among them, military products achieved revenue of 995 million yuan, an increase of 24.97% year on year, and civilian products achieved revenue of 36 million yuan, an increase of 25.92% year on year; in addition, the company achieved revenue of 52 million yuan, a significant increase over 2022.
2. The reform of military tax policies affects the overall gross profit margin, and the fourth rate has improved markedly. In 2023, the company's overall gross margin was 32.35%, a year-on-year decrease of 4.79 pcts, and the gross margin of military products decreased by 5.60 pcts. It was mainly affected by the decline in product unit prices due to related tax policy reforms, and the increase in operating costs due to the transformation of construction projects and increased depreciation. In terms of expenses, the company's sales expenses rate remained stable year on year in 2023; the management expense ratio was 7.48%, down 1.48 pcts year on year; the R&D expense ratio was 6.96%, down 0.77pcts year on year; the financial expenses ratio was -0.04%, down 1.66 pcts year on year; the four fee rate decreased 4.10% year on year, a significant improvement over the previous year.
3. The bid for medium caliber ammunition was successful, and business development opened up a new situation. The company is in a leading position in the field of small-caliber anti-missile ammunition, judging from the current order scale, technical level and comprehensive capabilities. The company successfully bid for DT033/JK medium caliber ammunition in 2023, marking the opening of a new situation for the company in expanding its medium caliber ammunition business.
4. The company undertakes the task of developing and mass-producing multi-type missile/rocket solid engine charges in our military, and will benefit from missile/rocket emissions in the future. Currently, China's solid engine market space is about 10 billion yuan. The domestic market is mainly state-owned institutions and units engaged in related business, and the barriers are high. The company undertakes the task of developing and mass production of our military's current multi-type missile/rocket solid engine. It has the capacity of the entire industry chain and will benefit from missile/rocket emissions in the future; in addition, as the company's technical level continues to improve, its market share is expected to increase further.
5. Profit forecast and investment rating: We expect the company's net profit to be 1.99, 2.98, and 390 million yuan in 2024-2026, up 41%, 50%, and 31% year-on-year. The current stock price corresponds to PE of 39, 26, and 20 times, maintaining a “buy” rating.
Risk warning
Downstream demand for missiles and ammunition fell short of expectations; competition in the solid engine and ammunition industry worsened; equipment procurement prices changed, etc.