Introduction to this report:
The company's H1 performance in 2024 is in line with expectations, and revenue and profit are expected to grow steadily. Benefiting from the release of mass-produced models, deep participation in the development of new models, and continuing to expand new businesses such as aviation parts, the scale of performance is expected to increase steadily.
Key points of investment:
Maintain the target price of 135.44 yuan and maintain “increase in holdings”. The company is a leader in stealth materials. The product first-mover advantage is obvious. Downstream demand is highly determined, the superposition penetration rate continues to increase, and performance is expected to maintain steady growth. As the scale of mass-produced products increases, prices may fluctuate in stages. We adjusted the 2024-26 EPS to 2.72/3.59/4.43 yuan (previous value was 2.72/3.60/4.41 yuan) and maintained the target price of 135.44 yuan, corresponding to the company's PE 50 times in 24 years, maintaining the “increase” rating.
H1 production and sales increased steadily in '24, and revenue and profit are expected to grow steadily. 1) Benefiting from the continuous increase in mass production model tasks and the steady increase in production and sales volume, the company's H1 revenue and profitability increased sharply year over year. H1 is expected to achieve revenue of 0.497 billion yuan (+30.05%) in 24, net profit of 0.22 billion yuan (+19.63%) to mother, net profit of 0.22 billion yuan (+19.63%), after deducting 0.212 billion yuan (+21.21%) of non-net profit. 2) According to the company's Q1 performance estimates in '24, the company is expected to achieve revenue of 0.249 billion yuan (+27.60%), net profit to mother of 0.105 billion yuan (+10.56%), and net profit of 0.101 billion yuan (+14.17%) after deducting non-net profit of 0.101 billion yuan (+14.17%). The project construction of each holding subsidiary is progressing smoothly.
Benefiting from the continuous batch production and installation of advanced fighter jets and aviation engines, the company is deeply involved in the research and development of various new models and is actively expanding fields such as aviation parts manufacturing and acoustic materials. The scale of performance and profitability are expected to increase steadily. 1) Compared with the US military, there is still a lot of room for improvement in China's aviation equipment, and the volume of advanced fighter jets is expected to exceed expectations; 2) Against the backdrop of increased intensity of practical training, aviation development and maintenance needs are becoming increasingly urgent. The company lays out the aviation development industry chain, and the back-end business is expected to enter a steady upward channel; 3) The company actively lays out high-end new materials markets, card position trend tracks, and military advantage technology transforms civilian specialty materials into the landing. 4) Deeply involved in the development of new models: Over the years, the company has given full play to its advantages in industry, education and research, actively laid out cutting-edge technology in the industry, and participated in multi-model follow-up work. Currently, dozens of models are in the pre-development or small-batch trial production stage. As of the end of 24Q1, orders for special functional materials were in hand about 0.8 billion yuan; 5) Laying out aerospace components and deeply tied to the aviation development supply chain: the subsidiary Huaqin Hangfa expanded from parts processing to manufacturing, serving aviation development's “small core, big collaboration” layout, and gradually became a core supplier in the aviation development industry chain; 6) Expanding applications in the civil field: metamaterials In the field, develop high-end new materials for civilian use, and strive to open up new market opportunities.
Catalysts: Mass production models continue to stabilize volume, and mass production of next-generation products is accelerated.
Risk warning: New product development progress is lower than expected; fighter mass production progress is lower than expected.