Brief performance review

On April 23, the company released its 23-year annual report and 24-year quarterly report. In 23, the company achieved revenue of 2,412 million yuan (YoY +9.75%), net profit of 303 million yuan (YoY -24.50%), net profit after deduction of 280 million yuan (YoY +22.89%); 24Q1 achieved revenue of 662 million yuan (+9.07% YoY) and net profit to mother of 90,000,000 yuan (YoY +29.05%).

Management analysis

The two-aircraft business continues to expand, and there are sufficient orders in hand. According to the company's announcement: (1) In the gas turbine sector, the company achieved key breakthroughs in various models in the gas turbine business in '23, with new orders exceeding 600 million yuan. The company signed a strategic agreement with an international gas engine leader, and the order amount reached a new high. (2) In the field of aero engines, a certain type of aero engine chassis supplied by the company to Company G accounts for more than 50% of the global market share, and orders roll over until 2026; the company continues to deliver domestic aero engine blades in batches for a group, while also developing other types of blades and achieving the first set of deliveries; the company also delivers chassis, blades, etc. for domestic commercial large aircraft engines. The construction of the company's two-machine hot-end parts processing production line and thermal barrier coating production line progressed smoothly in '23, and it is expected that the first phase of the project will be put into operation in '24.

The layout of general aviation equipment power products is expected to achieve long-term growth with policy support. According to the “Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)”, China's general aviation equipment will form a trillion-level market size by 2030. In the future, it is necessary to accelerate the development of engines such as 200kW-class, 1000kW-class turboprops, etc. According to the company's announcement, the company acquired German SBM in 2016, completed the introduction of two turboshaft engine technologies, and established Yingliu Aviation. The business extended to the field of complete aero engines and supporting helicopters and drones. By the end of '23, the company had built 8 high-standard plants, built an engine test center, 4 test benches had been put into use, and built engine assembly lines and drone assembly lines. Yingliu Aviation has thoroughly developed 100KW-300KW turboshaft engines and hybrid packs below 400KW, taking into account pre-research on high-horsepower turboshaft engines. At present, the YLWZ-130/190 has completed localization development and small-batch production. The first YLWZ-300 was delivered in 24Q1, and the development of an unmanned helicopter with a take-off weight of 270 kg and 1000 kg has been completed. The company's turbo-shaft engine and drone product layout is early, benefiting from policy support, and is expected to achieve long-term growth in the future.

Profit Forecasts, Valuations, and Ratings

In 2024-2026, we expect the company's revenue to be 28.63/33.93/3,973 billion yuan, net profit to mother of 4010/496/605 million yuan, corresponding PE to 23/19/15X, maintaining a “buy” rating.

Risk warning

RMB exchange rate fluctuation; raw material price fluctuation; downstream demand falls short of expectations; promotion of low-altitude application scenarios falls short of expectations