Incidents:
The company announced its 2023 and 2024Q1 results. According to the company's announcement, the company achieved operating income of 1,408 billion yuan in 2023, a year-on-year increase of 4.45%, net profit to mother of 91 million yuan, an increase of 4.97% year-on-year, and net profit after deducting non-attributable net profit of 65 million yuan, an increase of 18.59% over the previous year. 2024Q1 achieved operating income of 204 million yuan, a year-on-year decrease of 2.70%, and realized net profit to mother of 10 million yuan, a year-on-year decrease of 8.57%. The 2023 results fell short of expectations, and the 2024Q1 results were in line with expectations.
Comment:
The three major business requirements continue to be released, driving steady revenue growth. According to the company announcement, revenue grew steadily in 2023.
According to our analysis, 2024Q1's revenue remains steady. By product, the aerospace business achieved revenue of 613 million yuan (yoy +1.47%), the nuclear industry robot business achieved revenue of 544 million yuan (yoy +3.11%), and the railway monitoring and maintenance business achieved revenue of 216 million yuan (yoy +5.29%) in 2023. The company's core benefits from high demand in the downstream aerospace and nuclear power sector. Relying on the Aerospace Science and Technology Group, the company's revenue is expected to grow rapidly as production capacity is released one after another.
An increase in the period expense ratio affects profitability, and a decrease in non-recurring revenue affects short-term performance. According to the company's announcement, the company's gross margin in 2023 increased 0.66 pcts to 20.70% compared to the same period last year, the net margin increased 0.03 pcts to 6.43% compared to the same period last year, and the 2024Q1 gross profit was 26.01%, up 3.66 pcts from the same period last year. The net interest rate was 4.82%, up 0.50 pcts from the same period last year. According to our analysis, 1) The increase in gross margin is mainly due to improvements in product structure and increasing scale effects. The gross margin of the aerospace business, which accounted for a relatively high revenue in 2023, was 21.08%, an increase of 1.19 pcts over the same period last year. 2) The increase in the cost rate during the period affected profitability. The cost rate for the 2023 period was 21.77%. Compared with 7.14 pcts in the same period last year, the company continued to increase market expansion and product development. Among them, the management expense ratio and sales expense ratio increased significantly, with an increase of 4.41/2.09 pcts respectively over the same period last year. 3) Other revenue for 2023 was $01 million, a decrease of $37 million from last year. Our analysis believes that as the scale effect increases and cost reduction and efficiency deepens, overall profitability is expected to continue to improve.
The quality of operations continues to improve, and contract liabilities remain high. According to the company's announcement, net operating cash flow in 2023 was significantly corrected to $59 million compared to the same period last year, and 2024Q1 improved compared to the same period last year. As of the end of 2024Q1, the company's contract debt was 377 million yuan. Maintaining a high level indicates a strong downstream boom. Inventory is 1,576 billion yuan. As contract liabilities are executed and inventory delivery is converted into revenue, the company's performance is expected to continue to grow.
The product lineage at both ends of the planet is rich, and the three-tier parallel drive is expected to drive high performance growth. 1) The company relies on the Fifth Aerospace Research Institute and is mainly engaged in space-borne simulation testing and component support, intelligent warehousing for nuclear engineering maintenance, and intelligent railway inspection services, and has deep reserves of related technology. 2) The company's aerospace products penetrate many upstream satellite sectors, such as attitude and trajectory control and propulsion subsystems, data management subsystems, ground simulation tests, etc., and the core benefit is the acceleration of domestic constellation construction. 3) Nuclear industry policy guidelines are developing at an accelerated pace, and special robots just need to be adapted.
China's nuclear power development gap is obvious. The country's “dual carbon” goals drive superposition policy guidelines, and the nuclear industry is growing steadily. 4) Railway operation safety inspection systems are the company's traditional business. The company has always maintained a leading position in the industry and still has room for growth.
The 2024-2025E profit forecast was lowered and the “Buy” rating was maintained. Considering the delay in the consolidation of part of the company's fund-raising and production capacity, combined with continued market expansion efforts to drive up the cost side, we lowered the company's net profit to mother for 2024-2025E to 1.05 billion yuan (previous value was 1.55/ 212 million yuan), respectively. The current stock price corresponding to 2024-2026E PE is 66/58/45 times, respectively. Relevant representative companies, Chengchang Technology (satellite communication operation), and Tianyin Electromechanical (star sensor), were selected for comparison. The average PE in the 2024E industry was 83 times higher, and the company's 2024 PE was lower than the industry average. Considering the rapid development of the company's aerospace business, the rapid pace of third-tier business, and strong external demand combined with the release of the company's fund-raising production capacity, future performance is expected to grow rapidly, so it maintains a “buy” rating.
Risk warning: the growth rate of military spending falls short of expectations; risk of technological innovation and application marketization; risk of fluctuating gross margin