occurrences

On April 24, Yingliu Co., Ltd. released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2,412 billion yuan, a year-on-year increase of 10%; realized net profit of 303 million yuan, a year-on-year decrease of 25%; and realized net profit without deduction of 280 million yuan, an increase of 23% over the previous year.

With 2024Q1, the company achieved revenue of 662 million yuan, a year-on-year increase of 9%, achieved net profit of 0.91 billion yuan, an increase of 11% over the previous year, and realized net profit of 90 million yuan after deduction, an increase of 29% over the previous year.

reviews

1. The “two machines” and nuclear power business have driven the company's revenue growth, and the company's gross margin is basically stable. In 2023, the company achieved revenue of 2,412 billion yuan, a year-on-year increase of 10%, gross profit margin of 36.17%, and a slight decrease of 0.55pcts year-on-year. By sector, the new aerospace materials and components business revenue was 788 million yuan, up 26% year on year, gross profit margin was 41.91%, down 3.70 pcts year on year; new nuclear energy materials and components business revenue was 380 million yuan, up 17% year on year, gross profit margin was 40.10%, down 0.08 pcts year on year; high-end equipment parts business revenue was 1,171 million yuan, up 1% year on year, and gross profit margin was 30.76% year on year, up 0.09 pcts year on year.

2. Expenses are well controlled, and net profit after deducting non-return to mother maintained a relatively rapid growth rate. In terms of cost rates, in 2023, the company's four-rate rate was 25.95%, a year-on-year reduction of 0.74 pcts, and the cost control was good.

Among them, the management expense ratio was 7.97%, a year-on-year decrease of 0.42pcts; the sales expense ratio was 1.39%, a year-on-year decrease of 0.23pcts; the financial expense ratio was 4.43%, a year-on-year decrease of 0.65pcts; and the R&D expense ratio was 12.16%, an increase of 0.56pcts year-on-year. In 2023, the company's net profit withheld from non-return mother was 280 million yuan, up 23% year on year. 2024Q1, the company's net profit withheld from non-return mother was 90 million yuan, up 29% year on year.

3. The “value chain extension” has achieved remarkable results, the “two-plane” business continues to expand, and a series of breakthroughs have been achieved in nuclear energy development. In the aviation development sector, a chassis supplied by the company to Company G accounts for more than 50% of the global market share. The order rolled over to 2026 to deliver domestic aviation blades in batches to a group and the delivery of chassis, blades, etc. for large domestic commercial aircraft engines. In the field of gas turbines, the company achieved key breakthroughs with several models. The new order amount exceeded 600 million yuan, delivered F grade 1, 2, and 3 directional hollow turbine blades in batches for the national “two-engine special project”, and signed strategic agreements with international fuel engine leaders. The order amount broke through a new high. In terms of the nuclear power and nuclear power business, in 2022 and 2023, the National Assembly approved 10 nuclear power units respectively, and the company's nuclear power business orders were delivered quickly; the company successfully completed technical breakthroughs in neutron absorption materials and composite shielding materials, and rigid and flexible shielding materials began to develop one after another, contributing new increases.

4. New progress has been made in “industrial chain extension”, which is expected to fully benefit from the development of the domestic low-altitude economy. The company acquired German SBM in 2016, completed the introduction of two turboshaft engine technologies, and established Yingliu Aviation. By the end of 2023, Yingliu Aviation had built 8 high-standard plants, R&D centers and supporting facilities; built an engine test center, 4 test benches have been put into use; and built engine assembly lines and drone assembly lines. At present, the YLWZ-130/190 has completed localized development and small-batch production; the first YLWZ-300 was delivered in the first quarter of 2024; the 120KW and 275KW hybrid packs target the drone freight, extended-range electric truck, and emergency rescue markets, and have been recognized by target customers. The company has completed the development of unmanned helicopters with a take-off weight of 270 kg and a take-off weight of 1000 kg. In 2024, it will focus on completing the development and product certification of drones with a take-off weight of 600 kg.

5. We expect the company's net profit to be 413, 5.17, and 636 million yuan respectively for 2024-2026, corresponding to the current share price PE of 26, 21, and 17 times, respectively, to maintain an “increase in holdings” rating.

Risk warning

The development of the domestic gas turbine and nuclear power industry falls short of expectations; the development of complete engine products such as engines and helicopters falls short of expectations; the risk of export trade and exchange rate fluctuations, etc.