Core views:
Incident: The company released its quarterly report for '24, achieving revenue of 61 million yuan (YoY -87.14%), net profit attributable to mother of 0.27 million yuan (YoY -141.86%), net profit deducted from non-mother of 0.36 million yuan (YoY -158.43%), and gross profit margin of 27.15% (YoY+0.19 pcts).
Comment: The Zigong drone base was officially put into operation, and diversification of “low altitude+logistics” applications can be expected. 24Q1 achieved revenue of 61 million yuan, down 87.14% from 23Q1 and 95.45% from 23Q4, mainly due to a decrease in the number of products delivered in the current period as agreed in the contract compared to the same period of the previous year; 24Q1 realized net profit of -0.27 million yuan, a decrease of 141.86% compared to 23Q1 and a decrease of 145.22% from 23Q4. On the cost side, the cost ratio increased by 66.89pcts to 74.12% year-on-year during the 24Q1 period, and the sales/management/R&D/finance ratio changed 4.68/34.49/59.91/-34.80 percentage points year-on-year to 5.30%/39.24%/67.38%/-37.80%, respectively. On the asset side, as of the first quarter report, accounts receivable and inventory increased by 2.59%/29.93% compared to the beginning of '24. On the cash side, the net cash flow from the company's operating activities in the first quarter of '24 was -469 million yuan, a year-on-year decrease of 224.41%, mainly due to the year-on-year increase in the amount of advance payments made in the current period. The Zigong base was officially put into operation, with an annual production capacity of 200 aircraft. According to the company's official account, on April 28, the Zigong drone industrial base was officially put into operation, achieving circulation within the entire industrial chain base, which can meet the production task of 200 aircraft per year, and the product delivery cycle was shortened by more than 30%. On April 28, the Pterosaur-2 drone was unveiled, achieving the first flight test of China's large-scale fixed-wing drone cargo logistics, providing a new paradigm and new solution for low-altitude logistics transportation, and promoting the development of full-scene and genealogical drone products.
Profit forecast and investment suggestions: Taking into account the company's boom in the military trade sector, the possibility of benefiting from domestic equipment construction, and product development expectations, etc., the company's EPS is expected to be 0.48/0.57/0.69 yuan/share in 24-26, respectively. Referring to comparable company valuations, we think it is appropriate to give the company a PE valuation of 85 times in 24 years, corresponding to a reasonable value of 41.01 yuan/share, and give it an “increase in wealth” rating.
Risk warning: Risk of fluctuating market demand, lower than expected market expansion at home and abroad, risk of major policy adjustments, intensification of domestic and foreign competition, excessive risk of concentrating on customers such as China Aviation Technology.