Core views:

Incident: The company released its quarterly report for '24, achieving revenue of 1,317 billion yuan (YoY +5.22%), net profit of 351 million yuan (YoY +4.95%), net profit of 351 million yuan (YoY +7.76%), gross profit margin of 41.21% (YoY+0.70pps), and net profit margin of 26.87% (YOY+0.39pps).

Delivery of aerospace composite products increased, and net profit to mother improved markedly in a single quarter. On the revenue side, 24Q1 achieved revenue of 1,317 billion yuan, up 5.22% year on year and 13.86% month on month.

Among them, the new aviation materials business achieved revenue of 1,305 billion yuan (YoY +5.05%), mainly due to the increase in delivery of major products in the current period; the equipment business achieved revenue of 3.6811 million yuan (YoY- 46.88%), mainly due to a year-on-year decrease in the machine tool business. On the profit side, 24Q1 achieved net profit of 351 million yuan, up 4.95% year on year and 87.64% month on month. Among them, the new aviation materials business achieved net profit of 365 million yuan (YoY +4.95%), mainly due to increased delivery of aviation composite products; the equipment business achieved net profit to mother of 8.751 million yuan, an increase of 520,800 yuan over the previous year, mainly due to a decrease in revenue scale. On the cost side, the cost rate for the 24Q1 period was 9.00% (YOY-0.17pps), and the sales/management/R&D/finance expenses ratio was +0.09pct/-0.09pct/-0.09pct/-0.17pct to 0.67%/6.52%/2.52%/-0.71%, respectively.

On the asset side, as of the quarterly report of '24, the company's accounts receivable increased by 54.86% compared to the beginning of '24, mainly due to the revenue expected to be repaid in the second half of the year; the tax payable increased by 488.89% compared to the beginning of '24, mainly due to the increase in value-added tax, income tax, etc. of the subsidiary's aviation industry composite materials; and 33.20% increase in taxes and additional taxes, mainly due to the increase in VAT surcharges.

Profit forecast and investment advice: EPS is expected to be 0.85 yuan/share, 1.07 yuan/share, and 1.32 yuan/share for 24-26, respectively. Considering the company's technical barriers, core supporting position, and rising sentiment in the downstream civil aviation market, etc., we believe that maintaining a reasonable value of 29.76 yuan/share remains unchanged, corresponding to a 24-year PE of 35 times, maintaining an “increase in holdings” rating.

Risk warning: low expectations for R&D progress; low expectations for equipment delivery; risk of major policy adjustments, etc.