occurrences

On February 28, Longda Co., Ltd. announced its 2023 performance report. In 2023, the company achieved revenue of 1,215 billion yuan, a year-on-year increase of 27.68%, and achieved net profit of 57 million yuan to mother, a year-on-year decrease of 39.96%.

reviews

1. Superalloy revenue increased 52.64% year on year, and market development results were obvious. The company seizes the opportunities for the global advanced aero engine and gas turbine market to continue to grow and the domestic market to expand the market. The continuous introduction of new brands has vigorously increased the production and sales volume of superalloy products. In particular, deformed superalloys have achieved good results in the three years since the project was put into operation. In 2023, superalloy achieved revenue of 724 million yuan, an increase of 52.64% over the previous year. Superalloy revenue accounted for 60% of the company's revenue for the year.

2. Net profit to mother fell 39.96% year-on-year in 2023 due to factors such as amortization of equity incentive expenses, calculation of inventory price decline losses, and increased R&D investment. In 2023, the company implemented equity incentives and hired management consulting agencies to optimize the organizational structure and operation management process, and sales and management expenses increased by about 30 million yuan over the same period; due to falling commodity prices, the company calculated a loss of about 28 million yuan in inventory prices; the company continued to increase investment in research and development of superalloy products and domestic and foreign market introduction, and related expenses increased by about 15 million yuan over the same period last year. In 2023, the company achieved net profit of 57 million yuan, a year-on-year decrease of 39.96%; realized net profit withheld from non-mother of 30 million yuan, a year-on-year decrease of 39.07%.

3. The company has a good overseas customer base and plans to build overseas production bases to accelerate overseas market development. In the field of international civil aviation, the company supplies Rollo's global forging suppliers in batches, while cooperating with Safran, Honeywell, Collins Aerospace, etc. to expand its international market share; in the field of international gas turbines, the company supplies Siemens, Beck Hughes, etc. in batches for the production of turbine discs and other components; in the international oil and gas sector, the company has entered Cameron's global supplier list and has begun supplying global machining suppliers. On January 18, the company announced that it plans to invest 20 million US dollars to establish a wholly-owned subsidiary in Singapore, lay out an international operating platform, establish an international business headquarters, R&D center and investment platform, and plan to invest in the first phase of the project for casting superalloy master alloys, special alloys and metal materials in Southeast Asia.

4. Equity incentives use the superalloy revenue growth rate as an assessment index. The high growth rate target reflects the company's confidence in development. On September 11, 2023, the company's equity incentives were granted for the first time to 4.802 million restricted shares at a price of 12.08 yuan/share. The company's equity incentives are assessed using the superalloy revenue growth rate. The assessment target values are 50%, 100%, and 150% growth rates of superalloy revenue in 2023, 2024, and 2025 compared to 2022, respectively.

5. The total capital to be repurchased is 100 million yuan to 200 million yuan to be used for the company's share incentives or employee stock ownership plans. On March 20, the company announced a plan to repurchase the company's shares through centralized bidding. The company plans to repurchase the company's shares through centralized bidding within 6 months from the date the board of directors deliberates and approves the plan, with a total capital of not less than 100 million yuan and no more than 200 million yuan. The repurchase price will not exceed 23.83 yuan/share. The repurchased shares will all be used for the company's share incentives or employee stock ownership plans at an appropriate time in the future.

6. Profit forecast and investment rating: We expect the company's net profit to be 115 million yuan and 155 million yuan respectively in 2024 and 2025, corresponding to the current share price PE of 36 and 27 times, respectively, to maintain an “increase in holdings” rating.

Risk warning

Foreign market development falls short of expectations; domestic market development and introduction falls short of expectations; raw material prices fluctuate; product prices fall beyond market expectations, etc.