Description of the event

Guobo Electronics Co., Ltd. released its 2023 annual report and 2024 quarterly report. In 2023, the company's revenue was 3,567 billion yuan, up 3.08% year on year; net profit to mother was 606 million yuan, up 16.47% year on year; net profit after deduction was 571 million yuan, up 13.94% year on year; total liabilities were 2,473 billion yuan, down 8.05% year on year; monetary capital was 2,331 billion yuan, down 0.30% year on year; accounts receivable were 1.74 billion yuan, up 22.98% year on year; inventory was 617 million yuan, down 35.43% year on year. In the first quarter of 2024, the company's revenue was 693 million yuan, down 0.62% year on year; net profit to mother was 121 million yuan, up 4.22% year on year; net profit after deduction was 118 million yuan, up 14.32% year on year; total liabilities were 2,072 billion yuan, a decrease of 30.44% year on year; monetary capital of 2.241 billion yuan, up 16.05% year on year; accounts receivable of 2,225 million yuan, up 37.87% year on year; inventory of 474 million yuan, a decrease of 60.94% year on year.

Incident reviews

The T/R component business has maintained steady growth, and profitability continues to increase. In 2023, the company's T/R components and RF module products grew steadily, achieving revenue of 3.379 billion yuan, an increase of 7.6% over the previous year. The company continues to explore and optimize production and operation management models to improve operating efficiency. In 2023, the company's gross margin increased 1.61 percentage points year on year to 32.28%, net interest rate increased 1.96 percentage points year on year to 17.00%, and profitability continued to improve.

Demand for military and civilian use continues to rise. In the defense sector, demand in the fields of accurate guidance and radar detection continues to rise. As the largest domestic T/R module R&D and production platform in addition to internal support for complete machine users, the company has technical and market advantages, and the multiple active phased array T/R components it has developed are gradually entering fixed batch production. In addition, phased array technology is gradually being applied in fields such as 5G/6G millimeter wave communication, automotive radar, weather radar, and low-altitude monitoring. The scale is increasing, and it will become another important growth point in the T/R component field. In the civil sector, while consolidating its position as a core supplier of RF devices for domestic mobile communication base stations, the company is actively developing the terminal field. Various types of RF chip products for terminals have begun batch supply to well-known terminal manufacturers in the industry, and the company has carried out technical research and product development work for various RF integrated circuits in the satellite communication field, and various products have been introduced by customers.

Investment advice

We expect the company's 2024-2026 EPS to be 1.89\ 2.43\ 3.28, respectively, corresponding to the company's closing price of 73.35 yuan on April 30, and PE of 38.7\ 30.2\ 22.4 in 2024-2026, respectively, maintaining the “increase in holdings - A” rating.

Risk warning

The installation of new equipment fell short of expectations; the progress of fund-raising projects fell short of expectations; demand for civilian products fell short of expectations.