Introduction to this report:
The company's performance is in line with expectations, profits have grown rapidly, and profitability continues to improve. The company is firmly responsible for its main business, focuses on high-quality operation, accelerates innovation and transformation, and continues to promote high-quality development, and is expected to maintain a high performance growth rate.
Key points of investment:
Maintain the target price of 71.83 yuan and maintain the increase in holdings. The company benefits from the release of strong demand for fighter jets in the context of military training and preparation. The combined focus is on improving quality and efficiency. Profitability continues to improve, and performance is expected to maintain rapid growth. Considering the phased fluctuations in downstream demand, we lowered the 2024-26 EPS to 1.43/1.85/2.25 yuan (previous value 1.53/2.01/2.25 yuan), which is 50 times the average PE value of the company in 2024. Since the company is highly determined about China's fighter leaders and future demand, the company was given 52.43 times PE in 24 years, maintained a target price of 71.83 yuan, and maintained a “gain” rating.
Performance was in line with expectations, profits achieved rapid growth, and profitability continued to improve. The company's 23 year revenue was 46.248 billion yuan (+11.18%), net profit of 3.07 billion yuan (+30.47%), net profit of 2.09 billion yuan (+32.78%); profitability continued to increase, gross sales margin was 10.95%, up 1.00pct year on year; net sales margin was 6.51%, up 0.95pct year on year; the company accelerated innovation and transformation, continued to increase R&D investment, R&D expenses of 976 million yuan (+31.85%).
Continuing to promote high-quality development, it is expected to maintain a high performance growth rate. 1) China's significant gap in the number and generation of military aircraft compared to the US is expected to drive the fighter industry to continue to grow rapidly; 2) In the future, the company is committed to achieving integrated development of “research, manufacturing, and maintenance”, accelerating capacity building, and optimizing the industrial layout; 3) Along with military pricing mechanism reform, the company's business expansion, product price increase, and management level improvement, profitability is expected to continue to improve, and profits are expected to grow rapidly.
Catalyst: The accelerated development of new equipment has brought about improved demand, significant enhancement of military aircraft maintenance capabilities, and breakthroughs in design and development capabilities.
Risk warning: New models are being released faster than expected, and new business expansion is not as fast as expected.