Events:
Recently, the company released its three-quarter report for 2022, saying that in the first three quarters, the company achieved operating income of 233 million yuan, down 1% from the same period last year, and realized a net profit of 9.9 million yuan, down 81% from the same period last year.
Comments:
1. Q3 single-quarter revenue increased by 60% compared with the same period last year, and the gross profit margin declined. Judging from the quarterly results of the company in the past three years, the third quarter is the traditional off-season of the company. 2022Q3, the company achieved operating income of 104 million in a single quarter, an increase of 60% over the same period last year. Due to the impact of the epidemic in the first half of the year, the delivery and acceptance of some of the company's products in the first half of the year was delayed and revenue was formed in the third quarter. In terms of gross profit margin, the company's Q3 single-quarter gross profit margin was 45%, down 16 percentage points from the previous month, mainly due to the increase in the localization rate of the company's products and the rise in the price of some materials. In the first three quarters, the company's overall gross profit margin was 53%, down 7 percentage points from the same period last year. In terms of expenses, in the first three quarters, the company's management expenses increased sharply by 75% to 61 million, mainly due to the implementation of equity incentive share payment and depreciation and decoration amortization after the conversion of projects under construction to fixed assets, and R & D expenses increased steadily, and the company's net interest rate dropped to 4% from 22% last year. From the balance sheet, the company's inventory further increased to 299 million, an increase of 34% over the same period last year, and a further 67 million increase over the same period last year. The faster growth of inventory is the company's preparation for future product delivery. We believe that with the growth of the company's future revenue, the upstream bargaining power is expected to increase, with economies of scale, gross profit margin and net profit margin are expected to stabilize and pick up.
2. Satellite navigation business is expected to maintain rapid growth, and new services such as electronic countermeasures are expected to become important growth points in the future. Based on the field of satellite navigation and communications, the company actively expands the business of electronic countermeasures and appropriately explores new applications of civilian products, in which satellite navigation products are mainly used in the field of national defense and military affairs, and have participated in the development of a number of equipment models in recent years. a number of products have been finalized and entered the stage of mass production, which is expected to fully benefit from the high prosperity of the domestic military industry. The company's electronic countermeasures products are mainly used in terminal defense, deception jamming and simulation training requirements of various fields and platforms, benefiting from the strengthening of the deployment of electronic countermeasures equipment at home and abroad, and has broad prospects in the future.
3. The company has implemented equity incentive and employee stock ownership plan to demonstrate its confidence in future development. The performance evaluation target set by the 2022 restricted stock incentive plan issued by the company is that the growth rate of net profit in 2022-2024 is not less than 40%, 90% and 150%, respectively. On May 24, the company issued an employee stock ownership plan for 2022, which awarded 690000 shares completed on April 28 to no more than 12 employees at an average repurchase price of 57.81 yuan per share, of which 52% was the chairman. The higher performance evaluation indicators of equity incentives and the launch of the employee stock ownership plan demonstrate the company's confidence in the future development.
4. Profit forecast and investment rating: we expect the company's net profit from 2022 to 2024 to be 174 million yuan, 281 million yuan and 398 million yuan respectively, and the corresponding share price PE is 60, 37 and 26 times respectively, maintaining the "recommended" rating.
Risk tips: downstream demand such as military products is lower than expected; new business development such as electronic countermeasures is not as expected; product prices are lower than expected.
