The transformation of military industry has achieved remarkable results.
The company increased the business of ammunition parts and military power through the acquisition of Shenyang Haneng and sublimation Power supply. The company made a serious loss before it was injected into the military business, and completed a turnround in 2019 after it was injected into the military business, realizing a net profit of 50.41 million yuan. In 2020, the company realized revenue of 515 million yuan and net profit of 678 million yuan, of which 74.41 million yuan was deducted from non-return net profit, an increase of 47.61% over the same period last year.
The cost of land sale. The company's Q1 realized 44.23 million yuan (+ 94.37%) in non-return net profit in 2020, which continued to maintain high growth, mainly due to the increase in the batch production of weapons and equipment in China during the 14th five-year Plan period, and the acceleration of domestic substitution of military power supply.
Military module power supply ushered in a period of rapid development.
Module power supply is the core component of all kinds of electronic equipment, which is widely used in weapons and equipment, and the consumption increases with the increasing degree of electrification of weapons and equipment. From a comprehensive point of view, the development of weapons and equipment pulls the demand for module power from three dimensions: 1, the growth of the number of equipment drives the demand for module power; 2, the improvement of the degree of electrification of equipment drives the demand for module power, which is represented by an increase in the amount and value of module power in a single equipment. 3. The additional increment created by domestic substitution requires 100% self-control in the military field, and there is still a large room for domestic substitution for military power supply in our country.
There are opportunities for industry integration of military power supply, the company has the advantage of first mover, the structure of military power industry is relatively scattered, and the advantages of technology and capital contribute to the rapid growth of resource integration of the company. There are two significant development trends in China's military power industry because of the limited space in the military power industry, many industry participants and huge differences in the technological content of low-end products and high-end products. first, the current overall industry pattern is dominated by central enterprises and military institutes, with close cooperation between state-owned enterprises and private enterprises; second, power manufacturers frequently carry out mergers and acquisitions and resource integration. At present, the Matthew effect of the industry has gradually emerged. We believe that industry integration will continue. With the current industry integration capabilities of various companies and the historical pattern of the military industry, it is difficult to form a dominant oligarch model, but it may evolve into an industry pattern similar to the military MLCC industry, where multi-oligarchs carve up most of the market share. The company has great advantages in technical strength, capital strength and overall layout (Delixi, a major shareholder), and is expected to become one of the oligarchs in the field of military power in the future.
Investment suggestion
We expect the company to achieve revenue of 5.74,7.07 and 945 million yuan respectively from 2021 to 2023, and net profit of 2.52,2.79 and 367 million yuan respectively, corresponding to EPS of 0.57,0.63 and 0.83 yuan respectively, and PE of 20X, 18x and 14x respectively, giving a "buy" rating for the first time.
Risk hint
The company's power products are mainly military products, procurement has a strong planning, there is a risk that downstream procurement is lower than expected; the company's power products have a high gross profit margin, there is a risk of a decline in gross profit margin; the company's sugar business gross profit margin is low, there is a risk of loss.