FIRMACO(SH:600967) Tianfeng Securities·2024-08-20 13:40Investment Rating - The report gives a "Buy" rating for the company, marking it as the first coverage [4]. Core Views - The company is the only main battle tank research and manufacturing base in China, with a rich product line and broad fields of application [1][9]. - The company is expected to benefit from low valuations and high dividends, responding positively to market capitalization assessments [2][20]. - The demand for military products is expected to grow due to both domestic needs and foreign trade, with the company positioned to meet this demand effectively [3][22]. Summary by Sections Company Overview - The company is the only state-owned enterprise that integrates the research, production, and manufacturing of heavy vehicles, including tracked, wheeled, and armored vehicles [1][9]. - The company has undergone significant asset restructuring to enhance its operational capabilities and market position [1]. Financial Performance - The company's net profit margin for Q1 2024 was 7.27%, a decrease of 0.93 percentage points year-on-year, while the gross profit margin reached 13.55%, the highest in five years [2][16]. - The company reported a revenue of 22.84 billion yuan in Q1 2024, a year-on-year decrease of 11.92% [2][15]. Valuation and Dividends - As of August 19, 2024, the company's PE (TTM) was 15.58, placing it at a historical low percentile of 5.17% [2][20]. - The company has shown a consistent increase in dividend payouts, with a compound annual growth rate of 19.47% from 2021 to 2023 [2][20]. Market Demand - China's military budget is projected to continue increasing, with a focus on enhancing ground armored forces, which will benefit the company directly [22][24]. - The company is expected to capitalize on the growing demand for its foreign trade products, particularly the VT-4/5 tanks, which have gained popularity in international markets [3][22]. Profit Forecast - The company is projected to achieve net profits of 878.32 million yuan, 964.31 million yuan, and 1.06 billion yuan for the years 2024, 2025, and 2026, respectively [3][4].