Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 212 million yuan, +1.18% year on year, net profit of 63 million yuan, or -40.25% year on year; 24Q1 achieved revenue of 31 million yuan, -10.349% year on year, and net profit to mother of 0.4 billion yuan, or -50.11% year on year.
Revenue remained stable in 23, and the company's revenue remained stable in the short term due to expenses such as expansion of production. The gross margin fell 4.52 pcts to 76.30% year on year due to increased competition in the industry, but remained at a high level. Net profit margin fell 20.66 pcts to 29.79% year on year; 24Q1 company's gross profit margin was 80.84%, which was basically the same month on month, and the net profit margin was 13.44%, down 10.71 pcts year on year. The company's net interest rate declined markedly in '23 and 24Q1. On the one hand, the company increased investment in R&D and sales, and continued to expand new categories and markets for C-band and S-band radars. On the other hand, the number of employees increased by about 14% year on year; on the other hand, it was affected by non-recurring profit and loss projects such as reduced government subsidies and asset impairment preparations. Of these, 23 and 24Q1 confirmed credit impairment losses of 2.02 million yuan and 4.92 million yuan respectively.
Demand for civilian phased array radars continues to be released, and the application of phased array radars in civil fields such as meteorological detection, water conservancy and flood control, civil aviation, and marine monitoring is expected to continue to expand under the guidance of the company's main business policy. The company is a leader in phased array radars in the civilian field. In 2023, the company's product line continued to be rich. It successively released phased array rain radar and C-band dual-polarized active phased array weather radar, broadening application scenarios such as weather radar business monitoring, airport terminal meteorological detection, small to medium scale strong convective weather monitoring and warning, surface rainfall monitoring, etc., and its core competitiveness continued to be strengthened. Recently, the company won the bid for the weather radar equipment procurement project of Guangdong Yuecai Financial Leasing Co., Ltd., with a bid amount of about 238 million yuan, corresponding to 35 X-band dual-polarized phased array radars. The bid amount has already exceeded the annual revenue for 23 years, and the company's performance growth is highly certain.
Phased array radar has close detection range and high resolution, and is expected to fully benefit from low-altitude economic development. Compared with conventional flight airspace, the number of aircraft in low-altitude airspace is larger, routes are more complicated, and the low-altitude atmosphere has characteristics of strong convection, low visibility, and drastic changes. Meteorological conditions such as low-altitude wind shear, tropical cyclones, thunderstorms, and cloud conditions will pose a threat to safe general aviation flight. It will promote the demand for low-altitude weather monitoring and early warning radars, especially X-band phased array radars with close detection range and high resolution. The company is the chairman unit of the Zhuhai High-tech Zone Low Altitude Economy and Industry Alliance. The self-developed fully polarized multi-function phased array radar can solve problems such as air traffic control weather warning, “low slow and small” flying object monitoring and warning, and active aircraft detection, recognition and tracking, and is expected to fully benefit the development of the low-altitude economy
Investment advice
The company is expected to achieve revenue of 5.28/9.64 billion yuan and net profit of 2.24/4.17/643 million yuan in 2024-26. The price-earnings ratio corresponding to the current stock price is 41.2/22.1/14.4X, maintaining a “buy” rating.
Risk warning
Customer repayments fall short of expectations, market expansion falls short of expectations, and the low-altitude economy falls short of expectations