Incident: The company released its 2023 annual report, achieving revenue of 917 million yuan, a year-on-year increase of 36.45%, and net profit to mother of 335 million yuan, an increase of 0.48% over the previous year.
The company's strategic layout was gradually improved, and revenue from various businesses grew steadily: in 2023, the company achieved revenue of 917 million yuan, an increase of 36.45% over the previous year. The company's strategic layout is now beginning to bear fruit. The military sector is based on stealth materials and camouflage materials, and promotes the development of products related to the aerospace field, gradually becoming a core supplier in related fields. In 2023, the company's revenue in the field of special functional material products and services reached 88,74409 million yuan, and aerospace parts processing and manufacturing revenue reached 11.018,800 yuan. In the civil sector, based on high-end new materials, the company expanded into materials in key industrial fields such as acoustic metamaterials and heavy anticorrosive materials, enriching product categories and opening up new markets. During the reporting period, the revenue of the acoustic materials-related business reached 18.1976 million, accounting for 2% of total revenue.
The company's management increased their holdings of the company's shares to increase stakeholders' confidence in the company's performance: Huaqin Technology issued the “Action Plan to Increase Efficiency and Increase Return” in January 2024, which indicates that some directors and supervisors participated in the plan to increase their holdings within 6 months from January 31, 2024. The total increase in holdings ranged from 10 to 20 million yuan, and promised not to reduce their holdings within six months after completion. By further increasing the connections between the company's core members and the company, this move shows confidence in the company's long-term performance and future development. At the same time, it boosts employee morale, strengthens existing investors, and attracts more new capital to participate.
Increase the amount of shares held or use them for the development and construction of new projects, expand the scale of the company's industry, and improve the company's industrial structure.
Two major contracts have been signed, and the scale of the domestic new materials industry continues to expand: on January 17 and 30, 2024, the company announced the signing of two stealth material sales contracts, amounting to 310 million yuan and 332 million yuan respectively. These contracts are expected to have a positive impact on current results. Thanks to growing demand in the military aviation and maintenance markets, the company's performance has potential to grow. Under the combined influence of the three major factors of policy, capital, and market, the market size of China's new materials industry has rapidly increased, and it has become an important pillar industry for economic development. According to data, the total value of China's new materials industry reached about 6.8 trillion yuan in 2022, an increase of about 6 times over ten years ago. As a leading company in new materials, Huaqin Technology has certain advantages in technology and industry. Among them, in the special functional materials industry transformation sector, such as stealth materials and protective materials, the technology has reached the international advanced level and will quickly occupy market share in the future.
Profit forecast and investment rating: The company's performance is in line with expectations. Based on the company's leading position in the stealth materials industry and fluctuations in the order cycle, we slightly lowered the company's 2024-2025 net profit forecast to $511/638 million yuan (previous value: 643/882 million yuan), and added the 2026 net profit forecast value of 716 million yuan, corresponding to PE of 34/27/24 times, respectively, maintaining the “buy” rating.
Risk warning: 1) downstream demand and order fluctuations; 2) company profits fall short of expectations; 3) market systemic risk.