Core views:
Event: The company announced its 2024 quarterly report, achieving revenue of 6.272 billion yuan, yoy +1.98%; realized net profit of 1.55 billion yuan and 106 million yuan, yoy +76.04%, +444.82%; gross profit margin of 11.64%, yoy-0.34pct, net profit margin of 2.96%, yoy+1.21pct.
Comment: Net profit after deducting non-return to mother has increased rapidly, and net interest rates have reached the highest level in the same period in the past five years. We are optimistic about the increase in the profitability of leading aviation companies. The company's profitability increased significantly in the first quarter of 2024, achieving net profit of 155 million yuan, yoy +76.04%, mainly due to an increase in fair value change earnings (yoy +111.88%, mainly due to market fluctuations in the value of shares held in Bank of Guizhou), reduction in period expenses (9.36%, yoy-1.64pct), tax and additional reduction (yoy -61.24%, mainly due to a reduction in VAT paid in the current period); realized net profit deducted from non-mother net profit of 106 million yuan, yoy +444.82%, Mainly due to reduced expenses, taxes and surcharges during the period.
The gross profit margin was 11.64%, yoy-0.34pct, the net profit margin was 2.96%, yoy+1.21pct. The net profit margin reached the highest level in the same period in the past five years. On the cost side, the results of improving quality and efficiency are gradually showing. During the first quarter of 2024, the cost ratio was 9.36%, yoy-1.64pct. The reduction in management and R&D expenses was relatively large, with a year-on-year decrease of 16.92% and 33.74%, respectively. The decline in management expenses or due to continued progress in improving quality and efficiency, the decline in R&D expenses was mainly due to a decrease in investment in project projects. The asset side may indicate that downstream demand is booming. Inventory in the first quarter of 2024 increased by 22.40% compared to the beginning of the year, mainly due to increased orders and increased product investment; other current assets increased 24.45%, mainly due to an increase in input taxes to be deducted; and accounts payable increased by 30.63%, mainly due to an increase in procurement of raw materials and supporting products due to increased production tasks.
Profit forecasting and investment suggestions: Optimistic about the leading position of aviation development OEMs. The revenue side benefits from the potential increase in product lineage development and maintenance, and the profit side is expected to benefit 0.64/0.85/1.11 yuan/share in 24/25/26, respectively, maintaining a reasonable value of 45.31 yuan/share unchanged, corresponding to the 24-year valuation level of 70.80 times PE, maintaining a “gain” rating.
Risk warning: Fluctuations in raw materials; equipment production and delivery falling short of expectations; major policy adjustments, etc.