Description of the event
The company released the 2023 annual report and the 2024 quarterly report performance forecast. In 23, it achieved revenue of 917 million yuan, an increase of 36.45% over the previous year, and achieved net profit of 335 million yuan, an increase of 0.48% over the previous year. In 2024Q1, we achieved revenue of 248 million yuan, an increase of 32.61% year on year, and realized net profit of 114 million yuan to mother, an increase of +29.40% year on year.
Incident reviews
Revenue continued to grow at a high rate, and subsidiary stock payments affected profit release. The company is currently one of the few high-tech enterprises in China that can fully cover the design, development and production of room temperature, medium temperature and high temperature stealth materials. In particular, it has obvious technical advantages in the field of medium and high temperature stealth materials. In terms of revenue, revenue in 2023 increased 36.45% year over year. The main reason was that customer model tasks continued to increase, and orders for small-batch trial production of new products increased one after another, and current production and sales increased steadily compared to the same period last year. On the profit side, net profit to the mother increased by 0.48% year-on-year in 2023, mainly due to the subsidiary Shanghai Ruihuasheng's one-time share payment fee of 188 million yuan. Furthermore, the company's newly built subsidiary expanded rapidly and is still unprofitable. If the impact of share payments is excluded, net profit increased by about 30%.
There are plenty of orders in hand, and four new brands have been added to the small-batch trial production. The company disclosed two consecutive high-value contracts for stealth materials on January 17 and 30, 2024, with contract values of 310 million yuan (tax included) and 333 million yuan (tax included), respectively. By the end of March 2024, the parent company had orders of about 800 million yuan for special functional materials, bringing certainty to the company's performance growth. According to the company's October 2023 announcement, the company's four brands of stealth material products have reached important application points and entered the small-batch production stage. We believe that the company's multiple brands of products have successively entered the small-batch trial production stage, and batch production of new brands is expected to contribute additional volume to the company's performance in the future.
Active layout around high-end new materials, collaborative business development opens up room for long-term growth. While maintaining the competitiveness of existing core products, the company actively lays out high-end new materials. In October 2022, the company established Huaqin Hangfa to lay out parts processing and manufacturing around the aero engine industry chain. In 2023, it achieved revenue of 1.02 million yuan, ongoing orders of about 81 million yuan, and not yet executed orders of about 55 million yuan. Huaqin Optoelectronics was established in December 2022, specializing in acoustic metamaterials, acoustic equipment and technical services. It achieved revenue of 18.2 million yuan in 2023, and its products are in the market development period. The company continues to enrich the product sequence, explore market opportunities, and enhance the company's profitability and business scale through collaborative business development.
Investment advice
We predict that from 2024 to 2026, the company will achieve revenue of 1,243/16.12/2,062 billion yuan, respectively, an increase of 35.5%/29.7%/27.9%; net profit to mother of 5.01/6.42/796 billion yuan, an increase of 49.5%/28.2%/24.0% year-on-year, corresponding EPS of 3.6/4.62/5.73 yuan, and PE 37.9/29.5/23.8 times, respectively. Because the company has strong scarcity and many models are produced in small batches, it maintains a “holdings increase-A” rating.
Risk warning: the risk that the business is greatly affected by defense policies; the risk of high customer concentration; the risk of technology and products falling short of expectations; the risk that the promotion of civilian products falls short of expectations; the risk that fund-raising projects cannot be successfully implemented.