Incident: In 2023, the company achieved revenue of 29.07 billion yuan, +4.63% year over year; net profit to mother was 1,886 billion yuan, +39.62% year over year. The main reason was that after the company's absorption and merger was completed, the statements for the same period of the previous year were restated according to the same controlled enterprise merger policy in accordance with the provisions of the “Enterprise Accounting Standards”; net profit after deducting non-return to mother was 1,464 billion yuan, +110.19% year over year. In Q1 2024, the company achieved operating income of 5.643 billion yuan, -10.03%; net profit to mother of 454 million yuan, +35.19% year-on-year; net profit after deducting non-return to mother of 361 million yuan, +99.01% year-on-year. We believe that the company's defense aviation industry has achieved remarkable development results. All subsidiaries have completed defense product production tasks with quality and quantity, continuously improved product order and supply, and continuously improved product delivery quality and progress; the strategic layout of the civil aviation industry is progressing steadily, multi-type products have completed CTSOA certification, STC airworthiness certification, and accelerated design changes such as passenger power supplies, wheel brakes, etc., and emergency rescue products such as fire drums and photoelectric pods have been delivered in batches, which is expected to support the steady growth of the company's performance.
The main aviation products are growing steadily, and R&D investment continues to expand
In 2023, the company's aviation products achieved revenue of 24.738 billion yuan, +8.63% year-on-year, accounting for 85% of total revenue; defense products achieved revenue of 1,075 billion yuan, +10.57% year-on-year, all of which maintained a relatively steady growth rate. The company's gross profit margin was 29.73%, -1.81 pct year on year; net profit margin was 7.41%, -0.65 pct year on year. The cost rate for the period was 21.76%, -0.11pct; the sales/management/finance/R&D expenses ratio was 0.94%/8.45%/0.34%/12.03%, respectively, -0.04/-0.68/-0.85/+1.38pct, respectively. We believe that the aviation industry is a strategic high-tech industry of the country, an important component of the country's comprehensive national strength, and an important guarantee for national defense modernization. The company has a comprehensive product spectrum, a wide range of applications, a relatively complete aircraft carrier industry chain, a clear competitive advantage in professional fields, and a large market share; it also has strong technical advantages, and strong independent R&D and innovation capabilities for new products and technologies. With the rise of a new round of scientific and technological revolution, the company plays an increasingly important role in the informatization and intelligent development process of aviation equipment, and is expected to stabilize its performance. Improvements provide support.
The absorption and merger work was successfully completed, and mutual advantages enhanced core competitiveness. In 2023, the company successfully completed the share exchange, absorption and merger of AVIC Mechatronics, and changed its name to China Aviation Airborne Systems Co., Ltd. China Aviation Electromechanical is a specialized integration and industrialization development platform for aviation mechatronic systems under the aviation industry. It undertakes the full value chain management of aviation mechatronic products market development, design and development, manufacturing, after-sales service, and maintenance support, providing professional supporting system products for aviation equipment, and has a dominant position in the domestic aviation mechatronics field. We believe that this absorption and merger will help the company integrate and absorb the resources of the two parties, optimize the industrial layout of the aviation industry's airborne sector, achieve complementary advantages, effectively enhance the core competitiveness of existing companies, conform to the trend of systematization, integration and intelligence in the global aviation airborne industry, build an internationally competitive aviation airborne industry, and achieve a new leap forward in collaborative development and industrial expansion.
Adhering to the concept of high-quality development, it is expected that profit will continue to grow in 24 years. The company will continue to promote the high-quality development of the company and insist on building a leading flagship listed company with strong core competitiveness and strong market influence. Based on comprehensive balance, the company proposed a business plan for 2024, which is expected to achieve revenue of 28.522 billion yuan, -1.67% over the same period. Among them, defense business revenue declined due to factors such as industry policies, market environment, and insufficient order contract adjustments; other business revenue continued to grow. The company adheres to the concept of high-quality development, continues to reduce costs and expenses, and continuously improves economic efficiency. In 2024, it is expected to achieve a total profit of 2,437 billion yuan, +8.0% over the same period last year.
Profit forecast: Based on the company's expectation that 2024 defense business revenue will continue to grow due to factors such as industry policies, market environment and insufficient order contract adjustments, we have lowered our expectations reasonably: the company's net profit to the mother in 2024-2025 will be adjusted from 22.57/2,733 billion yuan to 20.84/2,348 billion yuan, respectively. The company's net profit to the mother is estimated to be 2,602 billion yuan in 2026. The corresponding PE after adjustment is 28.59/25.37/22.89X, maintaining the “purchase” evaluation. grade.
Risk warning: market competition risk, technological innovation risk, safety, environmental protection, quality risk, reform and business transformation risk, etc.