Hongda Electronics(SZ:300726) Xinda Securities·2024-02-29 16:00Investment Rating - The report assigns a "Buy" rating for the company, indicating a strong potential for price appreciation relative to the benchmark index [22]. Core Insights - The company has launched a "Quality Return Dual Improvement" initiative, focusing on core business and growth potential, which reflects long-term confidence in development and enhances investor sentiment [13]. - The defense modernization goals in China are clear, and the military electronics sector is expected to experience a recovery, with the company positioned to benefit from this trend [13]. - The company has shown significant growth in its tantalum capacitor business, with revenue increasing from 320 million to 1.11 billion from 2014 to 2022, achieving a CAGR of 16.7% [13]. - The company has increased its R&D investment significantly, with R&D expenses rising from 40 million to 180 million from 2018 to 2022, reflecting a CAGR of 43.4% [13]. Financial Summary - Total revenue is projected to decline from 2,158 million in 2022 to 1,708 million in 2023, before recovering to 1,990 million in 2024 and reaching 2,456 million by 2025, with a CAGR of 23.4% [3][13]. - The net profit attributable to the parent company is expected to decrease from 852 million in 2022 to 527 million in 2023, then increase to 617 million in 2024 and 774 million in 2025 [3][13]. - The gross profit margin is forecasted to decline from 66.6% in 2022 to 58.1% in 2023, stabilizing around 56.9% by 2025 [3][13]. - The return on equity (ROE) is expected to drop from 19.1% in 2022 to 10.9% in 2023, with a gradual recovery to 12.5% by 2025 [3][13]. - Earnings per share (EPS) is projected to decrease from 2.07 in 2022 to 1.28 in 2023, before rebounding to 1.50 in 2024 and 1.88 in 2025 [3][13].