Event: the company released its quarterly report of 2023 on October 27th, with revenue of 731 million yuan and YoY + 5.25% in the first three quarters of 2023; net profit of 33 million yuan and YoY + 127.47%; deducting non-net profit of 6 million yuan and YoY-81.96%. Performance is basically in line with market expectations.
3Q23 returns to its parent net profit to turn losses into profits. 1) in a single quarter, 3Q23 achieved revenue of 229 million yuan, YoY-1.79%; return to its mother net profit of 5 million yuan, turning losses into profits; deducting non-net profit of-7 million yuan, compared with-5 million yuan in the same period last year. 2) profitability: in the first three quarters of 2023, gross profit margin fell by 9.3ppt to 35.2% compared with the same period last year; net profit margin increased by 2.8ppt to 3.5% year-on-year. 3Q23 gross profit margin fell 8.3ppt to 32.7% year-on-year; net profit margin rose 7.1ppt to 0.7% year-on-year. The ability of cost control is improved, and the net interest rate is improved.
The ability of cost control has been improved. During the 1~3Q23 period, the expense rate decreased by 6.5ppt to 29.1% compared with the same period last year. 1) the sales expense rate was 1.6%, which was basically the same as the same period last year; 2) the management expense rate decreased from 4.7ppt to 14.8% year-on-year; 3) the financial expense rate was 7.3%, compared with 7.7% in the same period last year. 4) the R & D expense rate decreased to 5.4% compared with the same period last year. By the end of 3Q23, the company: 1) accounts receivable and bills were 661 million yuan, an increase of 3.4% over the end of 2Q23; 2) the prepaid amount was 36 million yuan, an increase of 14.2% over the end of 2Q23; 3) the inventory was 469 million yuan, an increase of 15.4% over the end of 2Q23; 4) the contract liability was 115 million yuan, an increase of 10.1% over the end of 2Q23.
1~3Q23:1) the net cash flow of operating activities is 121 million yuan, compared with 266 million yuan in the same period last year, which is mainly due to the preferential policy of tax withholding issued by the state in 2022, and the combined effect of the company's payment of taxes held over last year and the increase in cash paid for goods and labor services over the same period last year. 2) the net cash flow of investment activities is-538 million yuan, compared with-118 million yuan in the same period last year. 3) the net cash flow of fund-raising activities was 272 million yuan, compared with-36 million yuan in the same period last year.
Deep ploughing aviation supporting main industry, layout compound semiconductor chip manufacturing field. By product, 1H23:
1) R & D, manufacturing and support of core equipment: the revenue was 110 million yuan, YoY-16.2%, and the gross profit margin fell 22.92ppt to 27.7% compared with the same period last year. The business covers the development and guarantee of the main components of aero-engine, D-class full-motion flight simulator, cabin oxygen supply system and so on. It is a leading provider of high-end products in China. 2) Aeronautical engineering technology and services: the revenue was 360 million yuan, YoY + 17.8%, and the gross profit margin decreased by 5.76ppt to 37.3% compared with the same period last year.
Business includes aircraft overhaul, disassembly, complete aircraft painting, business aircraft operation, aviation training, etc., is the largest private aircraft MRO enterprise in China, and is the largest third-party pilot and flight attendant training center in China. 3) participate in Huaxin Technology: engaged in high-performance second / third generation integrated circuit design and manufacturing business, built the first domestic 6-inch compound semiconductor production line to fill the domestic gap.
Investment suggestion: the company is the largest private enterprise in China for aircraft overhaul, maintenance of accessories of the Ministry of Aviation, aircraft passenger aircraft to cargo aircraft, focusing on core equipment, aviation engineering and technical services and aviation training business, and the main industry is developing steadily.
We estimate that the company's net profit for 2023-2025 will be 60 million yuan, 80 million yuan and 100 million yuan respectively, and the current stock price will be 117x/92x/70x for 2023-2025 PE respectively. Taking into account the steady progress of the company's product development and the high level of downstream applications of compound semiconductors, we maintain a "cautious recommendation" rating.
Risk tips: downstream demand is lower than expected, product development progress is not as expected, and so on.