Introduction to this report:

The company's 2023 revenue +18.37%, net profit to mother -5.17%, contract debt +126.51%. Downstream demand for aerospace engines grew steadily, driven by exports, and the subsidiary Xinlitong's growth exceeded expectations.

Overinvestment is expected to launch a number of exhibitions:

Maintain the target price of 27.28 yuan and maintain the increase in holdings. Due to fluctuations in downstream demand, the company's revenue growth rate for deformed alloy products slowed in 23, and revenue for new alloy products declined. EPS was reduced to 0.52/0.59/0.69 yuan in 2024-26 (previous EPS value was 0.68/0.86 yuan, additional forecast for 26 years). Referring to a comparable company average of 26 times, benefiting from the shortage of overseas superalloys supply, the company's civilian superalloy exports exceeded expectations, giving 52 times PE in 24, maintaining a target price of 27.28 yuan, maintaining an increase rating of 27.28 yuan.

Revenue increased year over year, and R&D investment remained high. The company achieved revenue of 3.408 billion yuan (+18.37%) and net profit to mother of 319 million yuan (-5.17%) in 2023. The company's growth was basically in line with expectations. The company continues to emphasize R&D investment. The R&D expenditure in 2023 was 173 million yuan (+18.49%), and the R&D expenditure ratio was 5.08%. The gross profit margin increased by 29.22% by 1.54 pcts.

Overseas superalloy supply is in short supply, and Xinlitong's growth has exceeded expectations. 1) Compared with the US military, China's aviation equipment still has a lot of room for improvement, and the company's downstream aviation development demand can be expected; 2) According to the “China COMAC Market Forecast Annual Report” data, the Chinese aviation market is expected to have 10007 airliners by 2041, with a CAGR of 5% from 2021 to 2041; 3) The company's petrochemical, metallurgy and building materials sectors benefited from exports driven by the shortage of overseas superalloy supply; 4) Xinlitong achieved revenue growth of 1.01 billion yuan (+39.33%) over expectations; 4) The company is a high-temperature alloy in China It is also one of the enterprises with the most advanced technology and the most complete production range in the field of light alloys, which is expected to benefit from increased industry demand and achieve continuous growth.

Catalysts: Export demand surged due to insufficient supply of superalloys overseas.

Risk warning: The company's new product development progress falls short of expectations, and the company's customer needs fall short of expectations.