NNCC(600435) 国金证券·2024-07-31 08:00Investment Rating - The report initiates coverage with a "Buy" rating for the company, assigning a target price of 10.72 RMB based on an 80x valuation for 2024 [2]. Core Insights - The company is a leading domestic enterprise in navigation control and ammunition information technology, focusing on military products after multiple capital operations. In 2023, the parent company, North Navigation, achieved a revenue of 2.58 billion RMB, accounting for 72.4% of the listed company's revenue [1][103]. - The company benefits from the growing demand for long-range rockets, showcasing strong business growth potential. The earnings per share (EPS) for 2024 is projected to be 0.29 RMB, reflecting a significant increase from previous years [2]. - The guiding cabin, which constitutes over 40% of the value of precision-guided weapons, is expected to see a continuous increase in its value share, driven by the low-cost advantages of long-range rockets and the high consumption in modern warfare [23][68]. Summary by Sections Company Overview - The company is part of the China Weapon Group and specializes in military-grade navigation control and ammunition information technology. It has undergone several capital operations to focus on its core military business [1][103]. - The company operates three subsidiaries: Zhongbing Communication, Zhongbing Aviation, and Hengyang Optoelectronics, contributing 12.5%, 9.3%, and 6.2% to the revenue, respectively [1]. Financial Performance - In 2023, the company reported a revenue of 3.56 billion RMB, a year-on-year decrease of 7.16%. However, the net profit attributable to shareholders was 192 million RMB, reflecting a year-on-year increase of 3.90% [103]. - The company forecasts a revenue of 3.81 billion RMB in 2024, with net profits expected to rise significantly in the following years [23]. Market Dynamics - The demand for long-range rockets is driven by their low-cost advantages and the increasing consumption in modern warfare scenarios. The report highlights the historical demand opportunities in military trade [10][23]. - The company has a strong competitive position in the guided cabin segment, benefiting from high technical barriers and the backing of the China Weapon Group [11][150]. Strategic Initiatives - The company is promoting digital intelligent manufacturing to enhance efficiency and reduce costs, with a steady increase in R&D expenditure as a percentage of revenue [112][154]. - A stock incentive plan has been implemented to align the interests of core employees with the company's performance, fostering a motivated workforce [12][150].