Net profit due to mother fell 30.74% in '23, maintaining a “buy” rating
Beimo Hi-Tech released its annual report. In 2023, it achieved revenue of 954 million yuan (yoy -4.39%), net profit to mother of 217 million yuan (yoy -30.74%), and deducted non-net profit of 209 million yuan (yoy -32.31%). Among them, Q4 achieved revenue of 172 million yuan (yoy +23.59%, qoq +7.62%) and net profit to mother of 131 million yuan (yoy -1134.36%, qoq -231.23%). We expect the company's 2024-2026 EPS to be 0.97, 1.26, and 1.54 yuan respectively (the previous value was 1.91 and 2.59 yuan in 2024-2025). The reason for the reduction was that the company's downstream demand for military goods was weak, while many business prices and gross margins declined. Comparatively, the company Wind agreed to expect an average PE value of 36 times in 24, giving the company 36 times PE in 24 years, with a target price of 34.92 yuan (previous value of 64.39 yuan), maintaining a “buy” rating.
Brake disc (secondary) revenue increased significantly. The gross margin declined due to an increase in the share of civilian products. The company's aircraft brake control system and wheel business achieved revenue of 414 million yuan in 2023, up 1.18% year on year, with a gross profit margin of 63.98%, an increase of 3.75pct; the inspection and testing business achieved revenue of 327 million yuan, down 25.73% year on year, gross profit margin 60.06%, a decrease of 9.44 pct, mainly due to the decline in the military electronic components industry; the brake disc (auxiliary) business achieved revenue of 192 million yuan Yuan, a year-on-year increase of 42.94%, with a gross profit margin of 51.92%, a decrease of 34.01%. The main reason was that demand for military brake discs was weak in 23, but civilian aircraft brake discs achieved relatively rapid growth and the share of revenue increased. However, the gross margin of civilian aircraft brake discs was significantly lower than that of military aircraft, which lowered the gross margin level of the brake disc business. The company's overall gross margin level in '23 was 59.78%, down 7.42pct.
Credit impairment reduced profits, and repayments and cash flow improved. The company's expense ratio was 20.65%, an increase of 2.44pct over the 23-year period; of these, the sales expense ratio was 4.34%, an increase of 0.25pct; the management expense ratio was 8.09%, an increase of 0.92pct; and the R&D expense ratio was 8.98%, an increase of 1.05 pct. The main reason for the increase in various cost rates was due to a decrease in revenue scale. The company accrued credit impairment losses of $118 million, which had an obvious impact on the profit side. At the end of '23, accounts receivable and notes amounted to about $2 billion, an increase of 1.72%. In terms of cash flow, the company received 884 million yuan in cash from sales of goods/provision of labor services in '23, an increase of 53.71%, and net operating cash flow of 210 million yuan, an increase of 238.50%.
The 24Q1 performance continued to be under pressure. The civil aviation and landing gear business grew, and the company achieved operating income of 240 million yuan in the first quarter of '24, down 23.71% year on year, and realized net profit to mother of 73 million yuan, down 45.63% year on year. The overall gross margin level was 62.63%, down 7.22 pcts from the same period last year. Orders in the 24Q1 military industry are still in the adjustment stage, but the company achieved rapid growth in the civil aviation brake disc business in '23. With new customers and new market expansion, the civil aviation brake business growth is expected to be continuous; at the end of '23, the company's various types of landing gear products reached important application points and entered the stage of scientific research or small-batch production. 24Q1 already confirmed some product revenue. Starting in '24, the landing gear business is expected to become a new growth point for the company's performance.
Risk warning: the risk of high customer concentration; the risk of slow development of the civil aircraft business.