Event: Company releases 2024 quarterly report
2024Q1's revenue and net profit to mother fell 25% year on year and 24% year on year respectively, and 2024Q1 achieved revenue of 4.01 billion yuan, down 25% year on year; net profit to mother was 750 million yuan, down 24% year on year, mainly due to the slowing down in order pace in the defense sector.
The company's performance is under pressure in the short term, and the profit level remains stable
1) The year-on-year growth rates of 23Q2-24Q1's revenue were 28%, 8%, 39%, and -25%, respectively, and the year-on-year growth rates of net profit to mother were 24%, 21%, 3%, and -24%, respectively. Short-term pressure on the company's performance was affected by industry demand.
2) The company's gross profit margin and net profit margin in 2023 were 37.95% and 17.61%, up 1.41 and -0.71 pct year-on-year.
2024Q1's gross profit margin and net margin were 35.55% and 19.79%, up -3.96, 0.27pct year-on-year.
3) The company expects sales of related transactions of 4.33 billion yuan in 2024, a continuous increase compared with the actual amount of 3.38 billion yuan generated in 2023 (1.1-11.30). With the gradual release of order demand in the industry, the company's performance is expected to continue to recover.
The defense connector market position is stable, and it continues to benefit from increased equipment volume+usage increase 1) Military modernization has brought about arms and equipment release. The company's downstream aviation, aerospace and other high-growth industries account for a relatively high share, and excellent tracks are expected to fully enjoy the high downstream growth rate.
2) Military informatization construction promotes the increase in electronic equipment usage. Connectors, as basic components of electronic equipment, are expected to continue to benefit from the increase in the degree of informatization of modern equipment, and the growth rate will also be faster than downstream.
3) The defense connector industry has high barriers and a stable competitive pattern. The company's overall competitiveness has been steadily improving, and new breakthroughs have been achieved in market expansion, and it is expected that it will continue to benefit from the modernization of China's military and the acceleration of informatization construction.
The high-end civilian manufacturing business focuses on strategic emerging industries and is expected to open up the company's second growth curve 1) Benefiting from the expansion of the downstream terminal market and the rapid development of markets such as new energy vehicles and photovoltaic energy storage, China, as the world's largest connector market, is still growing rapidly. Sales are expected to be around US$25.8 billion in 2023, accounting for 30.9% of the global connector market.
2) The quality and efficiency of the company's communications and industrial business operations has achieved new results, and the fields of data centers, petroleum equipment, photovoltaic energy storage and other fields have achieved rapid growth. At the same time, the company continues to accelerate its international layout, implement the “big customer+region” market development model, and the supporting role of global platforms is gradually becoming prominent.
3) The rise of new energy vehicles has changed the supporting pattern of traditional automotive connectors. The company's NEV business focuses on “world-class, domestic mainstream” customers. The coverage rate of mainstream car companies continues to increase, and multiple projects have been targeted throughout the year. It is expected that the future will continue to benefit from the increase in NEV penetration rate and the company's market share.
China Aviation Optoelectronics: The compound net profit growth rate for the next three years is expected to be 16%. The company's net profit for 2024-2026 is estimated to be 37.6, 43.9, and 5.18 billion yuan, respectively, up 13%, 17%, and 18% year-on-year. CAGR = 16%, corresponding PE is 20, 17, and 15 times, maintaining a “buy” rating.
Risk warning: 1) The continuity of special business orders falls short of expectations; 2) The expansion of the civilian goods business falls short of expectations.