Incident: The company released its 2023 annual report on the evening of April 17. In 2023, the company achieved revenue of 3,565 billion yuan, down 7.16% year on year; gross profit margin of 24.80%, up 3.21pct year on year; realized net profit of 192 million yuan, up 3.90% year on year; realized net profit without return to mother of 177 million yuan, up 26.71% year on year. The revenue side of the year declined in stages, and the profit side maintained steady growth.
Comment: Performance has maintained steady development, and R&D investment continues to improve the company's “8+3” technology system and industrial ecology. Looking at a single quarter, 2023Q4 achieved revenue of 1,167 billion yuan, a year-on-year increase of 16.81%; realized net profit of 0.7 billion yuan, a year-on-year decrease of 75.88%; and realized net profit without deduction of 272,500 yuan, a year-on-year decrease of 101.38%. On the cost side, the company invested 257 million yuan in R&D in 2023, an increase of 13.15% over the previous year, mainly due to the company's continued investment in technology systems in eight specialized fields of guidance and control, autonomous identification of AI targets, photoelectric detection and guidance, application of advanced materials, intelligent manufacturing, integrated thermal management, cluster networking communication, and intelligent integrated connectivity.
Complete key equipment insurance and supply tasks with high quality, accelerate the development of key equipment, and continuously upgrade the production process digitally and intelligently. Facing the trend of mass procurement of military products and parallel scientific research and production, the company continues to improve delivery capabilities as a “navigation control and ammunition informatization” military grade 2, 3 and 4 support core unit, and the construction of intelligent flexible production lines is advancing at an accelerated pace. During the reporting period, the company completed 86 project development and 78 technological innovation and process research in the three major fields of navigation and control, military communications, and intelligent integrated connectivity. The company systematically strengthened the supply, production and delivery process system during the reporting period, and used “1+6+N” data to drive quality management throughout the process. During the reporting period, the company completed research and production capacity improvement for a series of cruise products; completed phased construction of automated intelligent inspection lines and composite inspection units; and promoted the application of digital twins and simulation technology in product design, production line construction and optimization.
Continuously improve the construction of safety and quality systems, and further enhance quality control capabilities. During the reporting period, the company passed the production safety standardization assessment review; passed the CNAS laboratory system on-site assessment; and fully implemented on-site management standards and mobile phone use management regulations at production sites.
Profit prediction and investment advice: As a leading guidance and control company under the Ordnance Group, Northern Navigation has the advantage of accurate card positions, continuously improving digital intelligence capabilities, benefiting from high downstream demand, and is expected to achieve rapid growth in performance. The company is expected to achieve revenue of 41.35/49.93/6.119 billion yuan in 2024-2026 and achieve net profit of 326/4.20/525 million yuan, corresponding to EPS of 0.22/0.28/0.35 yuan, maintaining a “buy” rating.
Risk warning: risk of the pace of product delivery, risk of changes in military procurement policies.