合同负债高增预示需求向好，建设项目投产在即推动能力向上：公司2023 年末合同负债3.0 亿元，较2022 年末的1.3 亿元增幅达125.8%，截至20240331，公司合同负债进一步增加到3.4 亿元。合同负债的持续增长，或预示下游需求旺盛。截至年报期末，公司建设项目“德阳锻造一期”、“航空航天环轧中试基地项目”、“德凯平度新材料生产基地项目”、“西安叶片与（小型）结构件生产基地项目”建设进度分别达到90%、90%、100%、65%，随建设项目的陆续落地，将为公司未来增长提供保障。Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 3.41 billion yuan, net profit to mother of 320 million yuan, -5.2% year-on-year, net profit after deducting non-return to mother of 310 million yuan, +9.8% year-on-year; 2024Q1 achieved revenue of 790 million yuan, +28.6% year-on-year, and net profit of 90 million yuan, +57.7% year-on-year.
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The performance of the three major business lines was differentiated, with the performance differentiation of the foundry subsidiaries Xinlitong and Xi'an Steel Research: the performance differentiation of the company's casting, deformation, and new alloy products in 2023; 1) the foundry business line achieved revenue of 2.3 billion yuan, +32.6%, gross profit margin of 31.7%, +5.4pcts year on year; 2) The modified business line achieved revenue of 7.2 billion yuan, +3.3% year on year; 3) The new alloy business line achieved revenue of 350 million yuan, -12.1%. 38.5%, same Ratio -7.5pcts. The subsidiary Xinlitong achieved revenue of 1.2 billion yuan, +39.5% year over year, and achieved net profit of 180 million yuan, +252.9% year over year; Xi'an Steel Research achieved revenue of 110 million yuan (2022 revenue of 1.01 million) and realized net profit of 20.85 million yuan (net profit of 13,600 in 2022).
The high increase in contract debt indicates positive demand, and the immediate commissioning of construction projects is driving up capacity: the company's contract debt at the end of 2023 was 30 billion yuan, an increase of 125.8% from 130 million yuan at the end of 2022. As of 20240331, the company's contract debt further increased to 340 million yuan. Continued growth in contract debt may indicate strong downstream demand. By the end of the annual report period, the construction progress of the company's construction projects “Deyang Forging Phase I”, “Aerospace Ring Rolling Pilot Plant Project”, “Decay Pingdu New Material Production Base Project”, and “Xi'an Blade and (Small) Structural Parts Production Base Project” had reached 90%, 90%, 100%, and 65% respectively. With the successive implementation of construction projects, it will guarantee the company's future growth.
Profit forecasting, valuation and ratings: The company's three core businesses all revolve around superalloys, which are the key raw materials for aero engines. We are optimistic about the company's leading position in the industry built by the General Institute of Steel Research and Development and long-term R&D and production accumulation. Considering the fluctuating pace of downstream customer demand, we forecast the company's 2024-2026 net profit of 4.3/5.4/630 million yuan (+-33.1%/-36.2%/increase from the previous forecast), corresponding EPS of about 0.56/0.70/0.81 yuan, respectively. The current stock price corresponds to PE of about 31/25/22x, respectively. Considering that 1) the upgrade of downstream main combat equipment will drive the company's high-end products to benefit deeply, and 2) the company's active expansion of downstream high-add-on products is expected to continue to drive a high increase in the company's revenue performance, we maintain the company's “buy” rating.
Risk warning: the risk of rising raw material prices; quality risks caused by inadequate quality control; the risk that technological innovation does not meet the intended goals; the risk that customer orders will be affected by national defense policies and military equipment procurement investment.
