occurrences

Haite Hi-Tech released its 2023 annual report: in 2023, it achieved operating income of 1,053 million yuan (+15.81% year over year); net profit to mother of 47 million yuan (+263.21% year over year); and the cost ratio for the period was 28.03% (-6.34pct year on year).

Key points of investment

With the support of the country's major policies, the low-altitude economic market can be expected in the future

In October 2023, the “Green Aviation Manufacturing Industry Development Outline (2023-2035)” issued by four departments including the Ministry of Industry and Information Technology proposed that electric general aviation aircraft will be put into commercial application by 2025, and electric vertical take-off and landing aircraft (eVTOL) will be piloted; in December of the same year, the Central Economic Work Conference pointed out that a number of strategic emerging industries such as commercial aerospace and low-altitude economy will be built. Thanks to national policy support, the low-altitude economy has broad market space. The company has steadily promoted the development of large domestic aircraft projects, successfully developed and delivered the first domestic eVTOL simulator and simulation solution, which is expected to fully benefit from the development of the low-altitude economy.

The release of production capacity accelerates the increase in market share and the steady development of various businesses

In 2023, the production capacity of the company's various businesses was quickly released, and the scale of the business continued to expand. Aero engine support delivery reached a record high. The company expanded warranty models, extended model maintenance capabilities, and further increased market share; at the same time, 3 new passenger production lines were added, which are expected to be put into use in 2025; the subsidiary Shanghai Hute added new maintenance production lines, and the market share in East China has increased significantly; actively explores high-quality overseas customers in Southeast Asia, Northeast Asia, etc., and the share of overseas business revenue has increased. In the future, domestic and overseas markets will work together, and the company's performance is expected to continue to grow.

Expense control is effective, and profitability has improved markedly.

The company's ability to control expenses was improved, and the cost rate for the 2023 period was 28.03% (-6.34pct year on year). Among them, the sales expense ratio was 1.49% (+0.09pct year over year), and the management expense ratio was 14.9% (YoY -3.5pct), mainly due to the company's equity incentive fee reduction of 1.07 million yuan compared to the same period of the previous year; the financial expenses ratio was 7.8% (-0.57pct year over year), and the R&D expense ratio was 3.84% (YoY -2.35pct), mainly due to the capitalization of some of the company's R&D projects. In the future, the company will further strengthen cost management and continue to improve profitability.

Profit forecasting

The company's revenue for 2024-2026 is 12.11, 15.10, and 1,881 billion yuan, respectively, and EPS is 0.13, 0.16, and 0.21 yuan respectively. The current stock price is 87.5, 71.4, and 54.0 times PE, respectively. Considering the country's vigorous development of the low-altitude economy, the company's strategic layout of large domestic aircraft and eVTOL tracks as well as the company's “Made in China, Made in China” core brand influence is given a “buy” investment rating.

Risk warning

Risk of downstream demand falling short of expectations; risk of product development progress falling short of expectations; risk of policy changes.