NNCC(600435) GF SECURITIES·2025-01-14 03:09Investment Rating - The report assigns a rating of "Buy" to the company [2]. Core Views - The company is positioned as a leading supplier of navigation control and ammunition information technology in China, with significant growth potential driven by national defense modernization and military demand [8][16]. - The company is expected to achieve earnings per share (EPS) of 0.03, 0.21, and 0.29 yuan for the years 2024, 2025, and 2026 respectively, with a target price of 12.62 yuan per share based on a 60 times price-to-earnings (P/E) ratio for 2025 [8][16]. Summary by Sections Company Overview - The company focuses on dual-use products with guided control technology at its core, covering a range of products including navigation control, detection control, and military communication systems [16][21]. Market Demand - The modernization of defense equipment and the increasing need for practical training and military exports are driving demand for the company's products, particularly in the context of evolving international security dynamics [8][53]. Financial Performance - The company's revenue is projected to decline in 2023 but is expected to rebound significantly in 2024 and continue growing through 2026, with a forecasted revenue of 6.786 billion yuan in 2026 [8][34]. - The company has shown a compound annual growth rate (CAGR) of 8.5% in total revenue from 2015 to 2023, with net profit increasing from 0.33 billion yuan to 1.92 billion yuan during the same period [34][30]. Profitability and Efficiency - The company is enhancing its production line's automation, which is expected to improve efficiency and profitability, with a focus on high-value military products [8][34]. - The gross margin for dual-use products remains stable, contributing significantly to the company's overall profitability [34][30]. Strategic Positioning - The company is recognized as a key player in the military supply chain, particularly in the navigation control and guided weapon systems sectors, benefiting from the increasing military expenditure and modernization efforts [8][53].