\u3000\u3000 North Navigation Control Technology Co.Ltd(600435) (600435)
The core supporting supplier of Ordnance Group, with exclusive supply status for business division. The company is subordinate to China ordnance industry group. Its core business is navigation control and ammunition information technology. It is an important part of the group’s ammunition chain. According to the group’s business division, the company has no horizontal competitive relationship with other companies of the group and has unique market competitive advantages. The company develops and constructs military communication equipment and military electrical connector business, and its subsidiary zhongbing communication is in a leading position in the field of military ultrashort wave ground to air communication in China.
The strong demand for equipment and ammunition directly benefits from the high prosperity of military industry. Weapon group is the core support of our army’s damage and strike. Its main products include strategic and basic products such as tanks and armored vehicles, long-range suppression, air defense and anti missile, intelligent ammunition, photoelectric information, damage technology and so on. Under the background of “war preparation” and “Centennial goal of army building”, factors such as intensified border conflict between China and India, greatly increased ammunition load of combat platforms, increased number of models, accelerated ammunition consumption for practical training and so on are superimposed. The company has strong demand for rockets and smart bombs with important applications of inertial navigation. The company will directly benefit from the high prosperity of the military industry and enter the fast lane of development.
Implement the equity incentive plan and be confident of sustained and stable growth in the future. The company implemented the stock option incentive plan in December 2020, and actually granted 29592200 stock options to the incentive objects, accounting for about 1.99% of the total share capital of the company. The performance assessment requirements at the company level under the exercise conditions are: Based on the operating income in 2019, the compound growth rate of revenue from 2021 to 2023 shall not be less than 10%, 10.5% and 11% respectively, and the EOE shall not be less than 11%, It shows the company’s confidence in sustained and stable growth of future performance.
Profit forecast and investment rating: Based on the development prospect of the company’s military business, we predict that the net profit attributable to the parent company from 2021 to 2023 will be 180 / 247 / 325 million yuan respectively, the corresponding EPS will be 0.12 yuan, 0.17 yuan and 0.22 yuan respectively, and the corresponding PE will be 88 / 64 / 49 times respectively. It will be covered for the first time and given a “buy” rating.
Risk tips: 1) downstream demand and order fluctuation; 2) The company’s profit is less than expected; 3) Market systemic risk.
