Incident: The company released its 2024 quarterly report: 2024Q1 revenue was 4,013 billion yuan, -24.87% year-on-year, and net profit to mother was 751 million yuan, -24.41% year-on-year.
The short-term slowdown in demand led to phased fluctuations in the company's 24Q1 revenue, which is expected to improve in the future as demand in the defense sector picks up. The company achieved revenue of 4,013 billion yuan (-24.87%) in 2024Q1, or new demand was not fully released due to the slowing down of orders in the defense sector. The 2023Q1 revenue base was high during the same period, and the company's revenue fluctuated in stages. In the future, with the gradual release of demand in the defense sector, the company's revenue situation is expected to rise steadily.
Expense rates improved significantly during the 2024Q1 company period. 2024Q1 achieved net profit of 751 million yuan (-24.41%) to mother. The net interest rate of the 2024Q1 company increased to 19.79% (+0.26pct), of which gross margin fell to 35.55% (-3.96pct), or the share of the defense sector declined due to changes in the product structure; the expense ratio fell to 13.49% (-2.85pct) during the 2024Q1 period, and all expense ratios decreased: the sales expense ratio fell to 1.83% (-0.54 pct), the management expense ratio fell to 4.64% (-1.92pct), and the R&D expense ratio fell to 7.84% (-- 0.13pct), financial expense ratio reduced to -0.82% (-0.26pct).
Inventories remained high, and construction in progress was +13.42% compared to the beginning of the year. The company's inventory balance at the end of 2024Q1 was 4.481 billion yuan, +6.96% from the beginning of the year, and remained high. At the end of 2024Q1, the company's construction project was 2,034 billion yuan, +13.42% compared to the beginning of the year. Continued expansion of production capacity ensures subsequent delivery capacity.
With the restoration of the defense boom, the opening up of space for the emerging civil aircraft industry, and the optimization of the civil product structure, the company maintained high quality and rapid growth. Military products: Information technology construction and military products are booming. The company is a leading military connector with a high market share. As demand in the military industry picks up, the company's revenue growth rate is expected to pick up. Civil aircraft: Domestic aircraft have extensive space, and the company is deeply involved in domestic civil aircraft projects, which is expected to benefit from the expansion and strengthening of domestic civil aircraft. Communications and industry: The company focuses on the communications industry to continuously promote customer and product restructuring, strengthen the cultivation of emerging businesses, and continuously improve specialized market development capabilities. New energy vehicles: Focus on “world-class, domestic mainstream” customers. The coverage rate of mainstream car companies continues to increase. In '23, the company has targeted a number of projects, providing a strong impetus for the high-quality, sustainable and healthy development of the company's NEV business.
Maintaining the previous forecast, the company's EPS is expected to be 1.84, 2.19, and 2.63 yuan from 24 to 26, maintaining the company's comparative valuation of 21 times PE in 24 years, according to the previous report, and giving a target price of 38.64 yuan to maintain the purchase rating.
Risk warning
Military orders and revenue confirmations fell short of expectations; credit and asset impairment amounts were higher than expected