Incidents:
The company announced its 2024 semi-annual results report. According to the company's announcement, in 2024H1, the company achieved operating income of 0.476 billion yuan, a year-on-year decrease of 9.15%, and net profit to mother of 0.02 billion yuan, a year-on-year decrease of 9.04%, after deducting non-return net profit of 0.019 billion yuan, a year-on-year decrease of 3.46%. 2024H1 results fell slightly short of market expectations.
Comment:
The revenue growth rate of the three major businesses is divided, and the long-term growth trend is steady. According to the company's announcement, 2024H1's overall revenue declined slightly, and the revenue growth rate of the three major businesses was divided. By product, the 2024H1 aerospace business achieved revenue of 0.178 billion yuan (yoy -5.88%), the nuclear industry robotics business achieved revenue of 0.201 billion yuan (yoy -10.87%), and the railway monitoring and maintenance business achieved revenue of 0.097 billion yuan (yoy +5.03%). According to our analysis, short-term revenue is affected by industry factors and quarterly changes. In the long run, the company relies on the Aerospace Science and Technology Group and mainly benefits from the release of demand in the downstream aerospace and nuclear industries. As production capacity is released one after another, the company's revenue is expected to resume growth.
The scale effect boosted the improvement of profitability, and the results of cost reduction and efficiency were beginning to appear. According to the company's announcement, the company's 2024H1 gross margin increased 4.27pcts to 24.09% compared to the same period last year, and the net margin increased 0.01 pcts to 4.29% over the same period last year. According to our analysis, 1) the increase in gross margin was mainly due to scale effects and increased product profitability. Among them, the gross margin of the three major business products increased significantly; 2) optimization of the debt structure reduced some market expansion and R&D investment costs. 2024H1's financial expenses ratio was 0.59%, a decrease of 0.16 pcts compared to the same period last year, and the cost rate for the period was 18.28%, up 3.03 pcts from the same period last year. As the scale effect becomes more significant and cost reduction and efficiency continues to deepen, the company's profitability is expected to continue to improve in the future.
Cash flow continues to improve, and superimposed inventory remains high, and performance is expected to continue to improve. According to the company's announcement, the company optimized cash flow control. Operating cash flow increased by 54.95% year on year, and the capital situation improved markedly; the inventory amount remained high at 1.53 billion yuan, mainly in products, indicating that the company's production and preparation pace is stable. As inventory is delivered into revenue, compounded by continuous improvement in cash flow, the company's performance is expected to continue to improve.
The product lineage at both ends of the planet is rich, and the three-tier parallel drive is expected to drive high performance growth. 1) The company relies on the Fifth Aerospace Research Institute and is mainly engaged in space-borne simulation testing and component support, intelligent warehousing for nuclear engineering maintenance, and intelligent railway inspection services, and has deep reserves of related technology.
2) The company's aerospace products penetrate many upstream satellite sectors, such as attitude and trajectory control and propulsion subsystems, data management subsystems, ground simulation tests, etc., and the core benefit is the acceleration of domestic constellation construction. 3) Nuclear industry policy guidelines are developing at an accelerated pace, and special robots just need to be adapted. China's nuclear power development gap is obvious. The country's “dual carbon” goals drive superposition policy guidelines, and the nuclear industry is growing steadily.
4) Railway operation safety inspection systems are the company's traditional business. The company has always maintained a leading position in the industry and still has room for growth.
The 2024-2026E profit forecast was lowered and the “Buy” rating was maintained. Considering the delay in the consolidation of part of the company's fund-raising and production capacity, combined with continued market expansion efforts to drive up the cost side, we lowered the company's 2024-2026E net profit of 0.101/0.117/0.14 billion yuan respectively (previous value was 0.105/0.125/0.158 billion yuan), and the current stock price corresponding to 2024-2026E PE is 83/71/59 times, respectively. Considering the rapid development of the company's aerospace business, the rapid pace of third-tier business, and strong external demand combined with the release of the company's fund-raising production capacity, future performance is expected to grow rapidly, so it maintains a “buy” rating.
Risk warning: demand for aerospace products falls short of expectations; risk of technological innovation and application marketization; risk of fluctuating gross margin