Incidents:
The company released the 2024 semi-annual report performance forecast. In 2024, H1 is expected to achieve revenue of 0.497 billion yuan (yoy +30.05%), net profit due to mother 0.22 billion yuan (yoy +19.63%), after deducting non-return net profit of 0.212 billion yuan (yoy +21.21%). The company's revenue and performance growth rate is in line with expectations.
Comment:
The company's revenue and performance growth rate is in line with expectations. Q2 2024 is expected to achieve revenue of 0.249 billion yuan (yoy +27.6%) and net profit of 0.106 billion yuan (yoy +10.1%). The steady increase in the company's revenue is mainly due to batch model tasks and the continuous increase in orders for new products in small batches, and production and sales have increased steadily over the same period of the previous year; the main revenue growth rate is lower than that of the main revenue subsidiary that is still in the production capacity construction period, causing certain losses. As the subsidiary's business gradually expands, the performance side is expected to achieve high growth.
Continue to promote the construction of fund-raising projects, and the construction of production capacity is progressing steadily. According to the company's announcement, 1) Construction of the Huaqin Science and Technology New Material Park (Phase I) project is being accelerated. The structural stealth materials production workshop has begun equipment commissioning, etc., and the company has adopted the principle of use while construction is in progress. The Huaqin Science and Technology New Material Park (Phase II) project is also under construction planning. 2) Shenyang Huaqin Aviation Development is in progress with the construction of production lines. Some production lines have begun first product verification and trial production, and have passed the certification of important customer suppliers. 3) Nanjing Huaqin has now made business progress in the fields of acoustics laboratories, noise control for power plants, wind tunnel laboratories, sound-absorbing materials for buildings, rail transit, etc., and is actively carrying out research on acoustic meta-structural materials such as aviation, underwater vehicles, and high-speed trains. 4) Shanghai Ruihuasheng and Shenyang Ruihuasheng have been set up and are actively carrying out pre-project construction work.
The signing of major contracts one after another confirms the prosperity of the industry. On January 17, 2024, January 30, 2024, and July 5, 2024, the company disclosed the announcement of the signing of the sales contract for mass production projects. The tax-inclusive amounts of the contract reached RMB 3.10, 3.32 and RMB 132 million respectively, which is expected to have a positive impact on the company's current results.
A leading domestic specialty materials company with an outstanding market position. 1) The company's stealth materials and camouflage material products have been mass-produced and applied. Currently, it is one of the few domestic enterprises that can fully cover the design, development and production of stealth materials at room temperature, medium temperature and high temperature. As the requirements for national defense modernization increase, there is an urgent need to increase the number of military aircraft in China. Special materials have an outstanding strategic position, and the market space is broad. 3) The company has a number of core technologies with independent intellectual property rights, and has a first-mover advantage in the industry. Furthermore, fund-raising projects help the company break production capacity bottlenecks and meet market demand. 4) Subsidiaries: Subsidiaries with downstream layout such as processing, acoustics, and ceramic-based composites achieve diversified field layout.
Lower the 24-25 forecast and maintain the “Overweight” rating. Considering the impact of increased management expenses due to subsidiary share payment fees, we lowered the company's 2024-2025E net profit forecast to 0.51/0.68 billion yuan (previous value was 0.519/0.707 billion yuan), and the additional 2026E net profit forecast to be 0.91 billion yuan, corresponding to the current stock price 2024-2026 PE is 30/23/17 times, respectively. Considering strong external demand combined with the company's fund-raising and production expansion, future performance is expected to maintain steady growth, so it maintains an “increase in weight” rating.
Risk warning: risk of demand fluctuations; military mass production progress falls short of expectations; industry competition increases risk