Sun Create(600990) 民生证券·2024-04-28 00:00Investment Rating - The report maintains a "Cautious Recommend" rating for the company [12] Core Views - The company's core business has achieved breakthroughs in product layout, but order volumes have declined, and impairment losses have impacted profits [3] - The company is actively incubating strategic emerging industries, particularly in the low-altitude economy sector, with mature product series and rich market resources [3] - The company is expected to achieve net profits attributable to the parent company of 17 million yuan, 52 million yuan, and 109 million yuan in 2024, 2025, and 2026, respectively [3] Financial Performance Revenue and Profit - 2023 revenue was 1,927 million yuan, a YoY decrease of 29.2%, with a net profit attributable to the parent company of -553 million yuan [3] - 1Q24 revenue was 340 million yuan, a YoY increase of 60.8%, with a net profit attributable to the parent company of -8 million yuan, showing a narrowing loss [3] - Revenue is expected to grow to 2,308 million yuan, 2,811 million yuan, and 3,387 million yuan in 2024, 2025, and 2026, respectively [1][5] Profitability - 2023 gross margin decreased by 1.1ppt to 18.4%, and net margin decreased by 31.1ppt to -28.6% [3] - Gross margin is expected to improve to 21.49%, 21.88%, and 22.64% in 2024, 2025, and 2026, respectively [5] Product Breakdown - Radar and supporting products contributed 42% of 2023 revenue, with a gross margin increase of 1.1ppt to 30.3% [3] - Public safety products contributed 36% of 2023 revenue, with a gross margin decrease of 5.85ppt to 4.0% [3] - Power products contributed 18% of 2023 revenue, with a gross margin increase of 4.12ppt to 20.4% [3] R&D and Expenses - 2023 R&D expense ratio increased by 0.5ppt to 1.6% [3] - Total expense ratio increased by 5.3ppt to 21.3%, with sales and management expense ratios increasing by 1.5ppt and 4.2ppt, respectively [3] Financial Position - As of 1Q24, accounts receivable and notes were 2,140 million yuan, an increase of 4.2% from the beginning of the year [3] - Inventory was 1,320 million yuan, an increase of 5.1% from the beginning of the year [3] - 2023 operating cash flow was 110 million yuan, a YoY decrease of 8.2% [3] Valuation - The current stock price corresponds to 2024-2026 P/E ratios of 309x, 101x, and 48x, respectively [1][3] - The P/B ratio is expected to remain stable at around 2.4x from 2024 to 2026 [1][10] Industry and Strategic Focus - The company focuses on three major sectors: sensing products (industry), sensing infrastructure (enterprise), and sensing applications (government) [3] - The company is actively expanding into the low-altitude economy and has undertaken key projects in meteorological radar development [3]