Leading air defense warning radar company with a comprehensive range of products. The company is one of the leading enterprises in the design and manufacture of air defense warning radar in China. Due to the high threshold of the industry, there are few competitors on the same track. The company's main business includes complete radar machines, radar supporting equipment and radar components, covering the entire R&D, production, sales and service process of the air defense warning radar industry. The products are highly complex and valuable, and the product range is quite comprehensive.

Performance is under pressure in the short term, and the long-term development trend is good. Affected by the mid-term adjustments of the “14th Five-Year Plan”, the company's performance declined in the short term. In 2023, the company's revenue was 0.726 billion yuan, down 23.85% year on year; net profit to mother was 0.102 billion yuan, down 34.66% year on year. In the future, with the gradual resumption of orders, the finalization and production of the company's new models and the continuous expansion of the company's new business, the company's long-term development trend is good in the future.

Vigorously promote business diversification and focus on developing new performance growth points. Facing short-term performance pressure, the company vigorously promoted business diversification, and achieved breakthroughs in fields such as military trade and low-altitude economy. In 2023, the company's military trade business revenue reached 0.11 billion yuan, achieving significant growth; it won the bid for a military air control radar supporting equipment development project, taking the first step in the field of air traffic control radar support; and formed a low-altitude division to vigorously explore new productivity in the low-altitude economy.

IPO financing promotes the expansion of production and the promotion of fund-raising projects. The company raised an IPO in 2023, with a capital amount of about 0.91 billion yuan, mainly investing in intelligent production transformation and R&D test base construction projects. The fund-raising project will improve the overall intelligent production level of radar, improve the production efficiency and product quality of key processes, and provide a better testing environment for the company's R&D.

Investment advice: The company has a stable leading position in the field of air defense warning radar, and the development of new models of products has opened up room for future growth. We expect the company to achieve operating income of 1.018/1.275/1.608 billion yuan and net profit of 0.14/0.17/0.221 billion yuan in 2024-2026. The corresponding PE was 37.18/30.71/23.51 times, respectively. It was covered for the first time, and a “gain” rating was given.

Risk warning: relatively single product structure; risk of fluctuations in military trade business; risk of price and profit margin fluctuations; risk of lifting the ban on restricted stocks