NNCC(600435) Guotai Junan Securities·2024-06-12 01:31Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to 12.28 CNY [7][11]. Core Insights - The company is experiencing short-term pressure on performance due to factors such as tax policy adjustments and delays in formal contract signings for related product orders. However, a long-term demand inflection point is anticipated, which is expected to drive significant growth in performance [11]. - For 2023, the company achieved revenue of 3.565 billion CNY (down 7.16% year-on-year) and a net profit attributable to the parent company of 192 million CNY (up 3.9% year-on-year). The first quarter of 2024 saw a substantial decline in revenue and a net loss [11]. - The gross margin for 2023 was 24.8%, and the net margin was 7.0%, both reaching five-year highs [11]. Financial Summary - Revenue projections show a decline in 2023, with expectations of recovery starting in 2024, forecasting revenues of 4.369 billion CNY in 2024, 6.204 billion CNY in 2025, and 7.817 billion CNY in 2026, reflecting growth rates of 22.6%, 42.0%, and 26.0% respectively [6][11]. - The net profit forecast for 2024 is 246 million CNY, increasing to 474 million CNY by 2026, with corresponding EPS estimates of 0.16 CNY and 0.32 CNY [6][11]. - The company’s financial ratios indicate a return on equity (ROE) of 7.1% in 2023, projected to rise to 12.8% by 2026 [6][11]. Industry Context - The company is positioned to benefit from high demand in the defense sector, particularly in navigation control and ammunition information technology, which are expected to maintain high growth due to ongoing geopolitical tensions [11]. - The report highlights the company's strategic advantages as a core enterprise under the weapons group, focusing on its main business areas [11].