Incident: The company recently released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 212 million yuan, YoY +1.18%; net profit to mother of 63 million yuan, YoY -40.25%; and gross profit margin of 76.30%, a year-on-year decrease of 4.52 pct. The first quarter of 2024 achieved revenue of 31 million yuan, YoY -10.34%; realized net profit to mother of 4.2309 million yuan, YoY -50.11%; gross profit margin of 80.84%, up 0.09pct year-on-year. Performance is under pressure in the short term.
Comment: Due to increased competition in the industry, the company's product prices and gross margin declined slightly in 2023. In terms of profitability, the company achieved sales of 29 radar units in 2023, with a single unit price of about 6.6432 million yuan, YoY -11.10%; the main reason for the decline in unit price and gross margin was increased competition in the industry. Factors such as lower gross margin and continued increase in R&D investment, increased sales expenses for market development, reduction in government subsidy amounts, and depreciation of accrued assets put pressure on the company's profit side. On the cost side, the company's sales expenses in 2023 were 0.28 million yuan, YoY +82.76%, mainly due to increased personnel remuneration and other expenses due to market development; management expenses of 0.29 million yuan, YoY +87.60%, mainly due to an increase in personnel remuneration; R&D expenses of 57 million yuan, YoY +35.27%, mainly due to an increase in personnel remuneration and depreciation and amortization.
It won the bid for Guangdong Guangdong Finance's financial weather radar order, and its technical capabilities and growth potential were further verified.
On April 23, the company issued an announcement stating that it was recently recommended as the first successful candidate in the “Guangdong Yuecai Financial Leasing Co., Ltd. Weather Radar Equipment Procurement Project”. The project tenders for 35 X-band bipolar phased array weather radars. The company expects to win the bid amount of about 238 million yuan. The technical advantages and high market recognition of the company's fully polarized active phased array radar are further reflected.
Civilian phased array radar applications are gradually being promoted, and demand in downstream applications is expected to continue to be released. Demand for phased array radars is expected to continue to be released under the impetus of relevant national policies such as disaster prevention and mitigation, water informatization, low-altitude economy, localization of air traffic control equipment, and large-scale equipment upgrades. Among them, the construction of a meteorological monitoring network in the low-altitude field is the first core step in the development of the low-altitude economy industry. The company is the chairman unit of the Zhuhai High-tech Zone Low Altitude Economy and Industry Alliance, and is expected to enjoy the dividends of low-altitude economic development.
Profit forecast and investment advice: The company is a leading civilian phased array radar manufacturer in China. It has strong technical advantages. It is optimistic about the company's expansion in application fields such as meteorology, water conservancy, air control, defense, and low-altitude economy, and has achieved rapid growth in performance. The company is expected to achieve operating income of 569/10.09/1,459 billion yuan and net profit to mother of 248/443/666 million yuan in 2023-2025, corresponding to EPS of 1.60/2.87 /4.31 yuan/share, maintaining a “buy” rating.
Risk warning: Revenue recognition fluctuations, technology iteration and R&D risks, increased competition in the industry.