occurrences
On April 11, the company released its 2023 annual report. In 2023, the company achieved operating income of 826 million yuan, a year-on-year increase of 47%, achieved net profit of 92 million yuan, a year-on-year increase of 17%, and realized net profit of 90 million yuan without return to mother, an increase of 35% over the previous year.
reviews
1. The prosperity of the civil aviation industry has improved, and the company's performance has grown rapidly. In 2023, the domestic civil aviation boom picked up. The total annual civil aviation traffic turnover was 118.83 billion tonkilometers, up 98% year on year, equivalent to 92% in 2019; among them, domestic route transportation turnover was 86.73 billion tonkilometers, up 124% year on year, equivalent to 105% in 2019, and international route transportation turnover was 32.1 billion tonkm, up 52% year on year, equivalent to 69% in 2019. Benefiting from the recovery in the civil aviation boom, the company's performance grew rapidly. In 2023, the company achieved revenue of 826 million yuan, an increase of 47% over the previous year, and achieved net profit of 90 million yuan without return to mother, an increase of 35% over the previous year. Looking ahead to 2024, the domestic civil aviation industry is expected to maintain a relatively rapid growth rate with the resumption of international routes, and the company's aviation materials distribution and self-development business to airlines and MRO are expected to maintain a relatively rapid growth rate.
2. Aviation materials distribution and self-development business go hand in hand to create a second growth curve. In 2023, the company's aviation materials distribution business revenue was 772 million yuan, up 47% year on year; self-development business revenue was 53.41 million yuan, up 45% year on year. In terms of aviation materials distribution business, the company strives to expand new business, develop suppliers and expand aviation materials categories to gain more market share. In 2023, the company received the “2022 Excellent Supplier” from China Airlines Shenfei Civil Aircraft, the “C919 Large Airliner TC Forensics Advanced Group Award” from COMAC, and the “2023 Gold Dealer of the Year” by Huntsman. In terms of self-research business, the company has passed the CAAC airworthiness certification of the Civil Aviation Administration of China, which can be equivalent to replacing imported aviation materials on multi-type passenger aircraft such as Boeing and Airbus operated domestically. Some products of the wholly-owned subsidiary Runhe New Materials have been included in the COMAC standard materials manual.
3. Due to factors such as price increases from a small number of suppliers, increased amortization after infrastructure project consolidation, and increased share payment fees, profit margins have decreased, and the company's expenses are well controlled. In 2023, the company's gross sales margin was 24.37%, down 3.97 pcts year on year, and the net sales margin was 11.13%, down 2.95 pcts year on year. It was mainly affected by factors such as price increases from a few suppliers, increased amortization after infrastructure project transformation, and increased share payment fees. The company's four-fee rate was 10.52%, down 1.87 pcts year on year. Among them, the management fee rate increased by 0.48 pcts year on year to 4.51%, the sales expense ratio increased by 0.52 pcts year on year to 6.71%, the financial expense ratio decreased by 2.82 pcts year on year to -2.09%, and the R&D cost rate decreased by 0.05 pcts year on year to 1.39% year on year.
4. Excellent asset condition, maintaining high dividends in 2023. By the end of 2023, the company had monetary capital of 612 million yuan, no short/long-term loans, a current ratio of 11.51, a balance ratio of only 8.01%, and an excellent asset position. In 2023, the company's profit distribution plans to distribute a cash dividend of 6.45 yuan (tax included) for every 10 shares, with a total dividend amount of 53.03 million yuan, accounting for 57% of the company's net profit to mother for the year. The high dividend ratio highlights that the company attaches great importance to shareholder returns.
5. We expect the company's net profit to be 1.17, 1.66, and 214 million yuan respectively for 2024-2026, corresponding to the current share price PE of 20, 14, and 11 times, respectively, to maintain an “increase in holdings” rating.
Risk warning
The recovery in demand in the civil aviation industry fell short of expectations; procurement prices rose due to exchange rate fluctuations and other factors; the development of the self-developed and self-produced business fell short of expectations; and the development of large domestic aircraft fell short of expectations.