2023 results are under pressure, optimistic about long-term development prospects
The company achieved revenue of 313 million yuan (yoy -21.93%), net profit of 190 million yuan (yoy -321.74%), net profit of 225 million yuan (yoy -435.54%). The decline in profit was mainly due to a decline in gross margin and an increase in R&D expenses; 1Q24 revenue of 68 million yuan (yoy -11.80%) and net profit of 10.366 million yuan (yoy -21.23%). Although the company's short-term demand fluctuates, benefiting from information technology construction and satellite internet development, the company's performance is expected to enter a new stage in 25 years. We expect net profit to be 2.07/3.67/459 million yuan (24-25 years ago value: 3.31/5.27). Considering the company's deep layout of low-orbit satellites and leading position in broadband in military regions, we gave the company a 25-year PE33x (comparable company average value 29x), with a target price of 19.28 yuan/share to maintain a “buy” rating.
The military 5G business has achieved a breakthrough, and the low-orbit satellite business is expected to grow rapidly due to fluctuations in industry demand, and the company's main business revenue and profit declined in 23 years. During the reporting period, the company strengthened its layout in the field of unmanned communication, achieved breakthroughs in 5G and terminal communications in the industry, participated in the first phase of the background research project in the field of individual soldiers, was shortlisted for the second phase of 5G and microwave network transmission competition for a communication system, shortlisted for 5G 5G technology selection, and won the bid for a 5G private network lightweight core network and 5G unmanned platform module development project. In terms of low-orbit satellites in the new field, the company is a low-orbit constellation communication subsystem research unit, participating in core processes such as satellite communication payloads, ground stations, and ground terminals. The first batch of ground station and test terminal products were successfully delivered at the end of the year. The company expects the satellite payload to be put into operation in 2024, in line with the 2024 launch plan of the relevant constellation to achieve delivery to the star.
1Q gross margin increased by 3.14 pcts year on year, and it is proposed to raise 300 million yuan of the company's comprehensive gross profit margin in 2023 by 43.34%, year on year -16.02pct; net profit margin -60.67%, -82.04pct year on year; 1Q24 gross profit margin 65.11%, +3.14pct year on year, net profit margin -14.74%, and -4.02pct year on year. The company's 23-year sales/management/ financial/ R&D expense ratio was +3.82/+5.05/+6.21/+47.34pct, respectively. The increase in R&D expenses was mainly due to the company's increased investment in new technologies and products such as 5G and next-generation tactical communication systems. According to the company's announcement, the company plans to request the shareholders' meeting to authorize the board of directors to issue shares to specific targets through simple procedures. The distribution target is no more than 35 people, and the total amount of capital raised does not exceed RMB 300 million.
Maintain a “buy” rating
Although the company's short-term demand fluctuates, benefiting from information technology construction and satellite internet development, the company's performance is expected to enter a new stage in 25 years. We expect net profit to be 2.07/3.67/459 million yuan (24-25 years ago value: 3.31/5.27). Considering the company's deep layout of low-orbit satellites and leading position in broadband in military regions, we gave the company a 25-year PE33x (comparable company average value 29x), with a target price of 19.28 yuan/share to maintain a “buy” rating.
Risk warning: The installation of new equipment falls short of expectations; the development of defense informatization falls short of expectations.