Incident: The company released its 2023 annual report. The 2023 revenue was 212 million yuan, up 1.18% year on year, and net profit to mother was 63 million yuan, down 40.25% year on year, after deducting 62 million yuan in non-net profit, down 27.46% year on year.
Key points of investment
Revenue was relatively stable, and net profit decreased year on year: 2023 revenue was 212 million yuan, up 1.18% year on year, net profit to mother was 63 million yuan, down 40.25% year on year, after deducting non-net profit of 62 million yuan, down 27.46% year on year. At the end of 2023, the company's total assets were 2.35 billion yuan, up 246.93% year on year; net assets attributable to shareholders of listed companies at the end of 2023 were 2.19 billion yuan, up 300.87% year on year. The increase in net assets was mainly due to the company's initial public offering of shares in 2023 and an increase in capital raised. The main reasons for the decline in the company's net profit compared to last year are mainly due to continued growth in the company's R&D investment, rising sales expenses due to new market development, a slight decline in the company's gross margin, a decrease in government subsidies, and a slight slowdown in repayment of accounts receivable, and increased preparation for bad debts.
The company was successfully listed to enhance brand influence: On March 1, 2023, the company was successfully listed on the Shanghai Science and Technology Innovation Board to provide financial support to expand production and develop new technologies and products, and enhance the company's popularity. New products such as phased array rain radar were launched during the year to enrich the product line, broaden application areas, and enhance competitiveness. In 2023, the company's R&D expenses increased 35.27% year-on-year, and 13 new patents were added. Currently, projects such as fully polarized digital active phased array radars are being developed to help future development.
Focus on product research and development and strengthen technical exchanges and cooperation: In 2023, the company spent 57 million yuan on R&D, an increase of 35.27% over the previous year. The company has obtained 7 new domestic invention patents, 4 utility model patents, and 2 design patents. Currently, the company is actively developing projects such as “fully polarized digital active phased array C-band radar”, “fully polarized phased array S-band radar”, and “dual polarized phased array hydraulic rain radar”.
The company has mastered the key core technology of phased array radar, and its products are widely used: the company is a domestic enterprise that has mastered the key core technology of fully polarized active phased array radar and industrialized dual polarization (dual polarization) active phased array radar at an early stage. The products currently produced by the company are mainly X-band dual-polarized (dual polarization) active phased array radars and supporting software and hardware products. Currently, they are mainly used in the fields of meteorological detection, water conservancy and rain measurement, and are gradually being marketed in the fields of civil aviation, marine monitoring, and public safety monitoring.
Profit forecast and investment rating: The company's performance is in line with expectations. Considering the order rhythm of the traditional main business and the low-altitude economy, we are optimistic about the company's long-term development opportunities. We adjusted the company's net profit forecast value for 2024-2025 to 229/414 million yuan (previous value: 268/340 million yuan), and added the 2026 net profit forecast value of 540 million yuan, corresponding to PE 43/24/18 times, respectively, maintaining the “increase” rating.
Risk warning: 1) Radar product development cycle is long, R&D investment is high, and R&D risk is high; 2) Business performance fluctuates seasonally; 3) Competitor strength increases and market competition intensifies; 4) government funding is reduced.