Key points of investment
Incident: The company released its 2023 performance report, and net profit to mother decreased by 18% year-on-year
1) In 2023, the company achieved operating income of 2,664 billion yuan, a year-on-year decrease of 4%; net profit to mother was 303 million yuan, a year-on-year decrease of 18%; net profit after deducting non-return to mother was 286 million yuan, a decrease of 21% year-on-year.
2) According to the 2023 performance report, we estimate the 2023Q4 results. We expect 2023Q4 to achieve operating income of 1,346 billion yuan, an increase of 122% year on year and 988% month on month; net profit to mother of 60 million yuan, up 424% year on year, up 105% month on month; net profit without return to mother of 50 million yuan, up 537% year on year and 92% month on month. (The main financial data for 2023 in the announcement is preliminary accounting data)
The 2023 results were affected by differences in market demand and product delivery structure. 2023Q4 performance surged month-on-month 1) Reasons for the decline in 2023 performance: Affected by market demand, the company's 2023 sales performance declined slightly year on year. At the same time, due to differences in product delivery structures, gross sales margin in 2023 fell by about 5 pcts year on year, leading to a year-on-year decrease in profit levels in 2023.
2) The reason for the sharp increase in 2023Q4 performance: Mainly, some products in the first three quarters were affected by delays in product certification and acceptance, and delivery was postponed to October.
The Aviation Industry Group attaches great importance to military trade development. The company's Pterosaur series drone products are expected to benefit from the establishment of the Military Trade Development Committee by the Aviation Industry Group in July 2023. The Military Trade Development Commission Office reported on the key tasks of the group company's military trade special operation for three years. Seven organizations, China Aviation Technology, Cheng Fei, Xifei Industrial Group, Shen Fei, Hongdu, Hafei, and Changfei, made separate special reports. We believe that China Drone is the aviation industry group's drone listing platform, and the Pterosaur series drone products are expected to benefit the Group in promoting high-quality military trade development.
The company's drone business has developed in a dual cycle at home and abroad, and the “Pterosaur” brand enjoys a high reputation in the military and civilian fields 1) The company's products mainly include drone systems such as Pteroson-1, Pteroson-1D, Pterosaur-2D, Pterosaur-2H, and Pterosaur-3, which have advantages such as long flight time and full autonomy with various control modes.
2) The “Pterosaur” brand has market influence and enjoys a high reputation at home and abroad in the military and civilian fields. In addition to the military field, the company's products have been successfully used in many civilian fields such as man-made weather effects and emergency communications.
Investment advice and profit forecasting
Based on the company's 2023 performance report, we have adjusted the company's profit forecast. It is estimated that in 2023-2025, the company's net profit will be 3.02, 3.58, and 429 million yuan, up -18%, and 20% year-on-year, and PE will be 69, 58, and 48 times. Considering the company's product strength and market advantages in large-scale fixed-wing long-flight time drone systems, it maintains a “buy” rating.
Risk warning: 1) Domestic military order demand falls short of expectations; 2) military export orders fall short of expectations; 3) The company's product delivery pace falls short of expectations.