Incident: The company announced its annual report for the year 23, achieving revenue of 46.248 billion yuan (YoY +11.18%), net profit of 3.07 billion yuan (YoY +30.47%), net profit of 2,910 billion yuan (YoY +32.78%), gross profit margin of 10.95% (YOY+1pcts), and net profit margin of 6.51% (YOY+0.95pcts).
Comment: The net interest rate broke through a record high of 6%, and the profitability of leading combat consoles continued to increase. The main economic indicators reached new highs during the reporting period. According to the company's annual report, the full-year batch production test flight mission was completed 36 days ahead of schedule. In terms of subsidiaries, Shen Fei's revenue and net profit increased 11.35%/32.45% year-on-year respectively. The revenue and net profit of Ji Airlines were 966 million yuan (YoY +11.48%) and 9.0187 million yuan (YoY -76.41%), respectively. The participating company Yangzhou Institute had revenue of 136 million yuan and net profit of 18.781 million yuan. On the cost side, R&D investment increased significantly. The cost rate for the period was 3.69% (+0.42pcts), and sales/management/R&D expenses increased by -26.46%/+12.38%/+31.85%, respectively. Among them, the decrease in sales expenses was mainly due to the reduction in exhibition fees, and the increase in management expenses was mainly due to increased expenses such as management consulting and equity incentives. On the asset side, monetary capital of 15.572 billion yuan decreased by 30.78% from the beginning of the year due to an increase in payment of purchase payments; accounts receivable increased by 105.06% compared to the beginning of the year due to an increase in product sales; and contract liabilities decreased 69.67% from the beginning of the year due to the increase in advance payments and product sales in the current period. On the cash flow side, operating activities generated net cash flow of -4393 billion yuan, mainly due to an increase in cash from purchasing goods and receiving labor payments.
Profit forecast and investment suggestions: EPS is expected to be 1.32/1.65/2.07 yuan/share in 24-26, respectively. It is expected to continue to benefit from equipment installation and upgrades, strengthen core capabilities in supply chain physical efficiency reforms, promote the construction of surrounding industrial clusters, acquire Ji Airlines, and participate in Yangzhou Academy to build an integrated aviation industry chain. “One aircraft and three” lays out a second military trade growth curve, adding equity incentives and improving quality and efficiency, and giving a PE valuation of 40 times 24, corresponding to maintaining a reasonable value of 52.85 yuan/share “Accumulation” rating.
Risk warning: equipment demand and delivery falling short of expectations, policy adjustments, military budget fluctuations, etc.