ZHENHUA(SZ:000733) Orient Securities·2024-05-07 02:32Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 57.80 CNY [2][4]. Core Views - The company's performance is under short-term pressure due to industry demand fluctuations and pricing pressures, but it is expected to gradually recover as industry demand improves [1]. - In 2023, the company achieved a revenue of 7.789 billion CNY (+7.19%) and a net profit of 2.682 billion CNY (+12.57%). However, in Q1 2024, revenue dropped to 1.014 billion CNY (-51.75%) and net profit fell to 102 million CNY (-86.13%) [1]. - The company is a leader in military components, with significant long-term growth potential as it expands its semiconductor business and product categories [1]. Summary by Sections Financial Performance - The company reported a revenue of 7.789 billion CNY in 2023, with a year-on-year growth of 7.19%. The net profit for the same year was 2.682 billion CNY, reflecting a growth of 12.57% [1]. - For Q1 2024, the revenue was 1.014 billion CNY, a decline of 51.75%, and the net profit was 102 million CNY, down 86.13% [1]. - The gross margin decreased to 59.34% in 2023, down 3.38 percentage points, and further declined to 47.6% in Q1 2024, a drop of 15.97 percentage points [1]. Expense Management - The company improved its expense ratio in 2023, which decreased to 19.19% (-3.19 percentage points). However, in Q1 2024, the expense ratio increased significantly due to the sharp decline in revenue [1]. Future Outlook - The company has set a financial budget for 2024, projecting a revenue of 6.9 billion CNY and a total profit of 2 billion CNY. It is anticipated that the company's performance will improve as industry demand recovers [1]. - The company is actively expanding its product categories and extending its industrial chain, which is expected to enhance its long-term growth potential [1].