The company released the results on the evening of August 23, 2021H1 achieved operating income of 226 million yuan, year-on-year + 100.17%, realized home net profit of 108 million yuan, + 89.85% year-on-year. The company is a leading manufacturer in the field of domestic aerospace manufacturing, with the full process manufacturing capacity of aviation parts, and is expected to fully benefit from the rapid expansion of China's aviation equipment and the continuous expansion of civil aircraft supporting demand. at the same time, the company actively arranges the field of intelligent manufacturing, and the growth space is expected to be further opened. With reference to the comparable company's valuation level and considering the company's industry position in the segment, maintain the company's "overweight" rating.

The net profit of H1 returned to its mother increased by 90%, and the income performance remained good. Benefiting from the rapid release of aviation equipment in China and the continuous expansion of the demand for civil aircraft, the company's 21H1 achieved revenue of 226 million, + 100.17% compared with the same period last year, and home net profit of 108 million, + 89.85% compared with the same period last year. The business of aircraft parts, the company's main products, is growing rapidly, from + 99.86% to 226 million compared with the same period last year. The company's Q2 performance continues the Q1 growth trend, with revenue of 118 million in the second quarter, + 83.84% year-on-year, + 8.46% month-on-month, and net profit of 61 million, + 101.23% and + 29.63%, respectively. Affected by factors such as rising labor costs and changes in business model, the company's Q2 gross profit margin decreased by 12.83pcts to 63.80% compared with the same period last year, and the overall gross profit margin decreased by 10.45pcts to 63.26% compared with the same period last year; R & D expenses were + 51.84% to 7.194 million yuan compared with the same period last year, or showed that the company was accelerating the development of new products; interest income increased and financial expenses decreased by 522800 yuan compared with the same period last year, so that the expense rate during the period decreased by 5.98pcts to 6.77% Combined with the above factors, the net interest rate in the first half of the year also decreased by 2.58pcts to 47.57%.

Inventory, prepayment and other indicators of substantial growth is expected to improve, rebate increase cash flow improvement. At the end of the reporting period, the company's inventory reached 165 million, an increase of 5.19% compared with the beginning of the period, of which the product was significantly + 88.26% compared with the same period last year, which may indicate that the company has sufficient orders on hand and the production scale may continue to expand. The prepaid account is 3.2418 million yuan, an increase of 35.08% compared with the beginning of the period; the substantial increase in inventory, prepayment and other indicators may indicate the improvement of the business for the whole year. At the end of the reporting period, the company's accounts receivable reached 248 million, year-on-year-15.33%, and the rebate further improved; the operating net cash flow in the first half of the year was 36 million, compared with-14 million in the same period last year, from negative to positive, considering that the company's customer credit is good, with the subsequent increase in payback, the company's cash flow is expected to continue to improve. During the reporting period, the company's aviation parts intelligent manufacturing and system integration center project progressed steadily, and the project under construction at the end of the period increased significantly to 38 million. With the project gradually completed and put into production, the company's production capacity may be further increased, and the product category is expected to continue to expand.

The completion of the fixed increase of new production capacity is expected to gradually fall to the ground, the layout of intelligent manufacturing to enhance the core competitiveness. The company announced that it intends to issue shares to specific targets to raise no more than 500 million yuan for the "Aviation parts Intelligent Manufacturing Center" project and supplementary liquidity. The structure of aviation parts is complex and Applied Materials Inc is diverse. The implementation of intelligent manufacturing upgrade based on the new generation of information and artificial intelligence technology is expected to improve product performance, development quality, shorten manufacturing cycle and reduce manufacturing cost. At present, the fixed increase has been completed, and the planned construction period of the project is 42 months. after completion, the production capacity and operation scale of the company will be significantly expanded. The company expects to achieve annual sales income of 234 million yuan and net profit of 60.02 million yuan after reaching full production. In addition, the intelligent and flexible degree of the company's production line will also be significantly improved, and the core competitiveness of products is expected to be further improved.

Risk factors: the growth of newly signed orders is not as expected; the development of new products is lower than expected.

Investment suggestion: the company is a leading manufacturer in the field of domestic aerospace manufacturing, with the full process manufacturing capacity of aviation parts, and is expected to fully expand the rapid release of aviation equipment and the continuous expansion of civil aircraft supporting demand. at the same time, the company actively layout the field of intelligent manufacturing, the growth space is expected to be further opened. Accordingly, the annual net profit forecast of the company in 2021-22-23 is raised to 2.33 PE 335 million yuan (the original forecast is 1.94Accord 262max 350 million yuan respectively), and the current price corresponding to the PE is respectively times that of 55-38-27. With reference to the valuation of the comparable company and considering the company's leading position, the company is given 44 times PE in 2022, corresponding to the target price of 60 yuan, and maintaining the "overweight" rating.