Incidents:
The company published its 2023 annual report and 2024 quarterly report. The company achieved revenue of 20.074 billion yuan in 2023, up 26.75% year on year; net profit to mother was 3.339 billion yuan, up 22.86% year on year.
The company achieved revenue of 4,013 billion yuan in 2024Q1, a year-on-year decrease of 24.87%; net profit to mother was 751 million yuan, a year-on-year decrease of 24.41%.
Comment:
The 23-year performance has been growing steadily, and the revenue of ammunition products has increased significantly. Revenue achieved steady growth in 23 years, mainly due to market development and rapid growth in strategic emerging industries. By product, 1) revenue of electrical connectors and integrated interconnect components in '23 was 15.50 billion yuan, up 27.17% year on year; 2) revenue of optical devices and optoelectronic equipment was 3.147 billion yuan, up 27.26% year on year; 3) revenue from other products such as liquid cooling solutions and other products was 1,427 billion yuan, up 21.35% year on year.
The company's profitability remains stable. On the gross profit side, the company's gross margin in '23/24Q1 was 37.95%/35.55%, a year-on-year change of +1.41/-3.96pct. On the profit side, the net profit margin of the company in '23/24Q1 was 16.63%/18.71%, a year-on-year change of -0.52/+0.12pct. On the cost side, the company's sales/management/R&D/finance expenses rate in '23 was 2.66%/6.64%/10.95%/-0.75%, with a year-on-year change of +0.01/+0.90/+0.86/+0.65pct; 24Q1, the company's sales/management/R&D/finance expenses ratio was 1.83%/4.64%/7.84%/-0.82%, year-on-year change -0.54/-1.92/-0.13/-0.26pct.
Accelerate industrial layout and steadily improve industrialization capabilities. In 2023, the company completed the mid-term evaluation and adjustment of the “14th Five-Year Plan” with high quality, accelerated the capacity building of the modern industry, successfully completed the basic device industrial park (phase 1) project, successfully completed the South China Industrial Base (Phase I), began a new high-end manufacturing journey, the high-end interconnect technology industry community, civil aircraft and industrial interconnection industrial park, and the Shenyang Xinghua aviation engine wiring harness and small fan capacity improvement construction project comprehensive assembly support center and Taixing Airlines photoelectric liquid cooling source series product integration system project was successfully capped; the company actively promoted the high-quality development of strategic business and developed Shenyang Xinghua shares Reorganization projects, optimize the shareholding structure of holding subsidiaries, and raise the level of corporate governance.
The company's 2024 financial budget highlights the goal of steady business. In 2024, with “steady growth, sustainable and high-quality development” as its main purpose, the company will adhere to strategic focus, focus on the main business, expand new industries, and build a “second growth curve”. According to the company's financial budget, the company plans to achieve operating income of 22.1 billion yuan in 2024, an increase of 10.09% over the previous year; the total planned profit is 4.110 billion yuan, an increase of 10.08% over the previous year.
Investment advice: We forecast that the company's revenue for 24-26 will be 244.85/298.75/35.487 billion yuan, and net profit to mother will be 42.24/52.85/64.59 billion yuan respectively, corresponding EPS of 1.99/2.49/3.05 yuan, PE 17.26/13.80/11.29X, maintaining the “buy” rating.
Risk warning: Order fluctuations, industry policy changes, performance and valuation judgments fall short of expectations.