Events:
The company released its annual report for 2020, with operating income of 1.76 billion yuan, an increase of 13.93% over the same period last year, a net profit of 263 million yuan, an increase of 23.58% over the same period last year, and a net profit of 254 million yuan, an increase of 23.99%.
Main points of investment:
With the simultaneous development of the army and the people, all business sectors go hand in hand, and profitability continues to rise over the years. The company has always attached equal importance to the development of the military and the people, and achieved good growth in the three main industries in 2020. Specifically, the revenue realized by aviation military products (401 million yuan, + 31.20%), the gross profit margin (34.45% quotation 1.34pct), the income realized by sensor control (788 million yuan, + 9.07%), and the gross profit margin (36.40% meme 0.14 pct); the revenue realized by intelligent transportation (525 million yuan, + 10.35%), and the gross profit margin (45.67% 1.35 pct). The company's overall gross profit margin increased by 38.87% over the same period last year, with a year-on-year increase of 0.38 pct; fee rate by 22.52%, and a year-on-year decrease of 0.70 pct; gross profit margin during the superposition period, driving the net profit rate to 15.44% higher than the same period last year, continuing the rising trend of the company's net profit rate over the years.
There has been a significant increase in prepaid accounts and inventory, reflecting that the company is actively preparing production to ensure product delivery. The company's inventory at the end of the current period was 593 million yuan, an increase of 26.36% over the beginning of the period, mainly due to a substantial increase in Hanzhong 101 scientific research production and new product orders, in order to meet the requirements of production delivery, the purchase of raw materials, self-made semi-finished products, and finished goods in stock have all increased. The advance payment at the end of the period was 29 million yuan, an increase of 23.53% over the beginning of the period, mainly due to the increase in prepaid materials in order to meet the order growth and production demand. The significant increase in prepaid accounts and inventory reflects that the company is actively preparing production to ensure product delivery.
The demand for aviation military products is strong, and the product line of measurement and control civilian products is constantly expanding. In terms of aviation military products, with the continuous progress of national defense and military modernization and the accelerated installation of new equipment, the company's product demand is strong, and its production and sales volume have increased significantly in 2020, and it is expected to continue to benefit from the high prosperity of the military industry in the future. In terms of civilian products, based on the core technology of intelligent measurement and control, the company continues to expand its products to the Internet of things and intelligent direction, and has achieved good results in consumer electronics, intelligent logistics, intelligent transportation and other fields. and it is expected to transform into a measurement solution provider in the future.
Establish and improve the long-term incentive and restraint mechanism to help the development of the company. In 2020, the company implemented the first phase of the employee stock ownership plan, with a total of 50.4996 million yuan (excluding transaction costs) to buy back 5.4581 million shares, accounting for 0.92% of the company's total share capital, and transferred to the employee stock ownership plan at 9.25 yuan per share.
In February 2021, the company announced that it intends to buy back the company's shares, with a total amount of 60 million yuan to 120 million yuan, which will be used for employee stock ownership plans or equity incentives. The implementation of the above incentive scheme will help the company to establish and improve the long-term incentive and restraint mechanism and help the company to develop better.
Profit forecast and investment rating: cover for the first time and give a buy rating. It is estimated that the net profit of the company from 2021 to 2023 is 351 million yuan, 433 million yuan and 523 million yuan respectively, and the corresponding EPS is 0.59,0.73 and 0.89 yuan respectively, and the corresponding share price PE is 22 times, 18 times and 15 times respectively.
Risk tips: 1) product delivery schedule is not as expected; 2) order fluctuation risk; 3) company profit is lower than expected; 4) market systemic risk.