SACO(SZ:002025) Jin Rong Jie·2025-03-31 14:53Core Viewpoint - Aerospace Electric's 2024 annual report reveals a significant decline in revenue and profit, primarily due to a slowdown in defense demand, despite growth in civilian and international markets [1][4]. Revenue Performance - In 2024, Aerospace Electric's total revenue was 5.025 billion yuan, a year-on-year decrease of 19.08%, marking the first substantial decline in recent years [1][4]. - The primary reason for the revenue drop is the phase of reduced demand in the defense industry, which has historically been a core business area for the company [4]. Cost Management - The company achieved a reduction in operating costs, which amounted to 3.098 billion yuan, a year-on-year decrease of 20.24%, attributed to the implementation of a cost-reduction plan [5]. - However, management expenses increased to 574 million yuan, a rise of 10.33% year-on-year, primarily due to higher salary costs associated with business expansion [6]. Research and Development - R&D expenses rose to 751 million yuan, reflecting a year-on-year increase of 7.50%, as the company focuses on strategic emerging industries and future technologies [6]. Cash Flow and Accounts Receivable - The net cash flow from operating activities was -259 million yuan, a decline of 115.76% year-on-year, largely due to reduced accounts receivable recovery and increased material reserve funding [7]. - The company's "make-to-order" model, characterized by small batch and diverse product orders, has led to higher material reserves, further straining cash flow [7]. Overall Assessment - The overall performance of Aerospace Electric in 2024 is concerning, with defense demand slowdown being the main factor for revenue and profit decline. Despite some success in cost control and expansion into emerging markets, rising management expenses and cash flow pressures present significant challenges for future growth [7].