Event: the company released its 20-year annual report, with revenue of 124 million yuan (- 35.25%) and net profit of 24 million yuan (- 60.01%). The company issued a 20Q1 forecast with revenue of 30 million yuan (+ 104.86%) and net profit of 6.5 million yuan and 9.5 million yuan (reversing losses, an increase of 823.73 million yuan over the same period last year and 11.237 million yuan over the same period last year).
Core viewpoints
Due to the backward adjustment of development tasks and delivery plans, revenue performance has declined in the past 20 years. The 35% decline in revenue in the past 20 years is mainly due to the backward adjustment of the overall unit development tasks and delivery plans, as well as the delayed resumption of work and production by related enterprises affected by the COVID-19 epidemic, resulting in the delayed delivery and acceptance of the company's products. Due to the decline in sales scale (the proportion of fixed costs and expenses increased accordingly) and the change in product structure (the batch production of military products decreased and the epidemic-resistant civilian products increased), the company's gross profit decreased by 20.16pct to 39.87% during the reporting period, and the expense rate increased to 50.69% during the reporting period, resulting in a 60% year-on-year drop in net profit over the same period last year, which was higher than revenue. We believe that the influencing factors leading to the decline in revenue in the past 20 years are accidental and sudden. With the effective control of the epidemic and the delayed delivery of orders, we are optimistic about the performance in the past 21 years.
Forward-looking indicators showed significant year-on-year growth, abundant orders-on-hand, 21Q1 showed a strong growth trend. The company's inventory at the end of the 20th year was 70 million yuan, an increase of 43.77 percent over the same period last year, while the amount received in advance and contract liabilities totaled 116 million yuan, an increase of 28.59 percent over the same period last year. In the second half of 20 years, with the receding of various adverse effects, the company has won large orders one after another, and the disclosed amount has reached 120 million yuan at present. At the beginning of 21 years, the company showed a strong growth trend, not only to repair the decline caused by the impact of the epidemic in the same period last year, but also to achieve 3.08% to 50.65% performance growth compared to 19Q1, making a good start.
The three major guidance business sectors show a high boom development trend. The main results are as follows: 1) with the hypersonic cruise missile moving from technical verification to practical application, as well as the demand for multi-mode composite guidance and cost-effective guidance, the permeability of infrared guidance is expected to continue to improve. During the reporting period, a number of optical guidance products developed by the company in cooperation with the overall unit have entered the stage of mass production. 2) as the "advanced intelligence contest" of modern warfare, military simulation serves the whole life cycle of guided weapons, and the company signs the project contract with the military directly during the reporting period.
3) under the influence of the rapid development of UAV, there is an urgent demand for high-precision and low-cost air defense system. Laser weapons have the characteristics of integration of inspection and fighting, low cost and high efficiency. During the reporting period, the company completed a platform dynamic tracking and pointing strike test, the key technologies have been verified, and it is expected to achieve multi-platform business development in 21 years.
Financial forecasts and investment suggestions
According to the 20-year annual report and equity incentive target, the company's EPS for 21 and 22 years is 0.89,1.68 yuan (originally 0.99,1.98 yuan), and the new 23-year EPS is 2.63 yuan. According to the 21-year average valuation level of the comparable company and gives a 25% valuation premium, corresponding to 53 times valuation, the target price is 47.17 yuan, maintaining the buy rating.
Risk tips: equipment demand is lower than expected; optical test gross profit margin fluctuates; valuation premium risk