ZMD(SH:688636) GUOTAI HAITONG SECURITIES·2025-12-16 11:36Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of 55.86 CNY [5][20]. Core Insights - The company focuses on the development, production, and service of high-reliability embedded computers, with products widely used in high-end equipment, particularly in the defense sector, which is expected to maintain strong demand [2][21]. - The projected net profit for the company from 2025 to 2027 is estimated at 1.14 billion, 1.7 billion, and 2.02 billion CNY, with corresponding EPS of 0.66, 0.98, and 1.16 CNY [14][20]. - The global military embedded systems market is expected to grow from 1.81 billion USD in 2024 to 3.23 billion USD by 2032, with a CAGR of 7.5% [10][20]. Financial Summary - Total revenue is projected to increase from 663 million CNY in 2023 to 1.208 billion CNY in 2027, with a significant growth rate of 70.7% in 2025 [4][11]. - Net profit attributable to the parent company is expected to recover from 19 million CNY in 2024 to 202 million CNY in 2027, reflecting a substantial growth trajectory [4][11]. - The company’s gross margin is anticipated to improve from 44.84% in 2025 to 50.75% in 2027, indicating effective cost control and operational efficiency [16][17]. Market Position and Growth Drivers - The company is positioned as a leader in high-reliability embedded computers, serving critical sectors such as aerospace and defense, with a focus on customized solutions [21][30]. - The demand for embedded computers in military applications is expected to rise due to the increasing complexity and technological advancement of military equipment [10][20]. - The company is actively pursuing opportunities in commercial aerospace and unmanned systems, which are projected to become significant growth areas [10][20]. Order and Revenue Growth - The company reported a significant increase in orders, with a 73.71% year-on-year growth in backlog orders, driven by rising customer demand [10][20]. - The embedded computer market for airborne and missile applications is expected to see substantial growth, with projected increases of 43.62% and 192.7% respectively from 2025 to 2027 [15][20]. Cost Management and Profitability - The company has successfully optimized its cost structure, leading to improved profitability metrics, with net profit margins expected to rise from 15.3% in 2025 to 16.7% in 2027 [16][39]. - The management has implemented effective cost control measures, resulting in a decrease in operating expenses as a percentage of revenue [39][42]. Investment and Future Outlook - The company is focusing on R&D investments to enhance its product offerings in unmanned systems and commercial aerospace, which are expected to drive future revenue growth [10][20]. - The strategic initiatives include launching fundraising projects aimed at developing embedded computing solutions for new markets, positioning the company for long-term growth [10][20].