Core views:
Incident: On January 31, the company issued the “2023 Annual Results Report Notice”. It is expected to achieve total operating income of 916 million yuan in 2023, an increase of 36.25% over the previous year; it is expected to achieve net profit of 334 million yuan, an increase of 0.29% over the previous year; it is expected to achieve net profit after deduction of 385 million yuan, an increase of 23.30% over the previous year. On the same day, the company issued the “Notice Concerning the Plan for Some Directors, Supervisors, and Senior Management to Increase Shareholding of the Company's Shares and the Company's Action Plan to “Improve Quality, Efficiency, and Value Return”. Some directors and supervisors of the company intend to increase their holdings in the company, with a total increase of 10 to 20 million yuan.
Comment: Revenue increased 36% year over year in '23, and subsidiary losses and share payment performance were under pressure. According to the performance report, according to estimates, 23Q4 achieved revenue of 314 million yuan, up 30.04% year on year 22Q4, and 42.71% month on month; 23Q4 achieved net profit of 64 million yuan to mother, down 52.18% year on year 22Q4 and 26.46% month on month. On the revenue side, customer model tasks continued to increase during the reporting period, and orders for small-batch trial production of new products increased one after another. The current production and sales volume increased steadily compared to the same period last year. On the profit side, the subsidiary's share payment expenses and production capacity construction period losses put pressure on the profit side. It is estimated that the holding subsidiary Shanghai Ruihuasheng New Materials confirmed a share payment fee of 186 million yuan, and the newly established subsidiary lost 22 million yuan during the production capacity construction period. Directors and supervisors have increased their shareholding in the company, demonstrating management's confidence in long-term performance. Ten senior directors and supervisors participated in the company's action plan to “improve quality, increase efficiency and increase return”, increasing the company's share holdings by 10 to 20 million yuan, and promised not to reduce their holdings within six months after completion. With the completion and commissioning of fund-raising projects and subsidiary projects, we are optimistic about medium- to long-term growth under increasing company models and expanding in multiple fields.
Profit forecast and investment advice: We expect the company's EPS for 23-25 to be 2.40/3.66/4.69 yuan/share, respectively. Based on comparable company valuations, considering the boom in high-end equipment, the company's standardized delivery of models under development, product category expansion, aviation development industry chain and layout in the field of new materials, etc., we gave the company a 24-year PE valuation of 35 times, corresponding to a reasonable value of 127.94 yuan/share, maintaining the “gain” rating.
Risk warning: risk of product price fluctuations; competition exacerbates risks; fluctuations in downstream equipment demand, etc.