2023 and 1Q24 results meet market expectations
The company announced its 2023 and 1Q24 results: in 2023, the company achieved operating income of 2.104 billion yuan, YoY +44.69%; realized net profit to mother of 186 million yuan, YoY +1.20%; realized net profit to mother 1.
8.6 billion yuan, YoY +1.20%; after excluding the impact of share payment fees, net profit attributable to shareholders of listed companies was 262 million yuan, YoY +16.52%. The annual report results are consistent with previous performance reports and are in line with market expectations. In 1Q24, the company achieved operating income of 578 million yuan, YoY +3.21%; realized net profit of 56 million yuan, YoY +10.36%. 1Q24 results are in line with market expectations.
Development trends
The main aviation forging industry's revenue is growing rapidly, and overseas markets are booming. 1) In 2023, the company's aviation forgings/energy forgings/gas turbine forgings achieved revenue of 1,501/2.40/166 million yuan, YoY +38.28%/+37.58%/243.23%, respectively. The revenue of aviation forgings and energy forgings continued to grow, and the gas turbine forging business was further expanded, and the revenue share increased to 8.27%. 2) In 2023, the company's overseas market revenue was 610 million yuan, YoY +92.34%, and gross margin increased 2.75ppt to 22.75% year-on-year. We believe that demand in the overseas civil aviation market is recovering strongly, which is expected to inject new growth momentum into the company.
Expenses were controlled reasonably during the period, and cash flow from operating activities improved year-on-year in 1Q24. 1) The company's expense ratio decreased by 1.23ppt to 13.69% year on year in 2023. Among them, the sales/financial expenses ratio decreased by 0.25/0.17ppt to 1.58%/1.25% year on year, respectively. The revenue scale continued to grow, and the scale effect was prominent. 2) The 1Q24 company achieved operating cash flow of -47 million yuan, an increase of 57 million yuan over the same period in 1Q23, and the cash repayment situation improved year-on-year.
Full on-hand orders indicate continued growth, and fund-raising projects are progressing steadily. 1) According to the company's announcement, as of the end of 2023, the company had a total of 4.868 billion yuan of active orders, of which the total number of orders placed by the customer was 2,603 billion yuan, YoY +28.48%. Combined with the production schedule confirmed with the customer, the amount of orders in hand during the Changxie period according to the corresponding price estimate was about 2,265 billion yuan. A plentiful supply of on-hand orders indicates that growth can be expected. 2) In 2024, the company's IPO fundraising project will strive to reach full production, and the company will launch an iterative upgrade of new projects based on this. We believe that the construction of the company's fund-raising projects will reduce costs and increase efficiency through improved process performance, which is expected to further enhance the core competitiveness of the product.
Profit forecasting and valuation
Taking into account the changes in the company's downstream demand structure and delivery pace in all directions, we lowered our 2024/2025 revenue forecast by 9.2%/11.5% to 26.18/3.321 billion yuan. Considering the year-on-year decrease in equity incentive amortization expenses in 2024/2025, we kept our net profit forecast basically unchanged. The current stock price corresponds to 2024/2025 17.0/12.4 x P/E. We maintain our outperforming industry rating and maintain a target price of 47.51 yuan, corresponding to 23.3/17.0x P/E in 2024/2025, with a potential increase of 37.4%.
risks
1) Risk of rising raw material prices; 2) Orders and product deliveries fall short of expectations.