Main points of investment:
The company released its semi-annual report for 2021, with an operating income of 2.691 billion yuan, an increase of 21.35% over the same period last year, a net profit of 57.7858 million yuan, an increase of 493.24% over the same period last year, and a non-return net profit of 11.0194 million yuan, an increase of 25.21% over the same period last year.
Main points of investment:
Products continue to be delivered, and revenue is growing rapidly. 21H1, the company's trainers and defense products are smoothly delivered to users in accordance with the requirements of the contract, model project development work steadily forward, revenue to achieve rapid growth. Of this total, the income of trainers was 1.214 billion yuan, an increase of 38.65 percent over the same period last year, and that of other aviation products was 1.388 billion yuan, an increase of 13.41 percent over the same period last year.
Contract liabilities have increased significantly, followed by sufficient reserves of new models and product orders. At the end of the first half of the year, the company's contract liabilities totaled 7.294 billion yuan, a sharp increase of 41704 percent over the beginning of the year, mainly due to an increase in prepaid payment; the advance payment was 7.544 billion yuan, a substantial increase of 4116 percent over the beginning of the year, mainly due to an increase in the company's prepaid purchase of materials. The substantial increase in contract liabilities and prepaid materials indicates that the company has sufficient orders and is actively preparing production, which is in a period of continuous growth.
The pilot training mode has been changed, the importance of advanced trainers has been highlighted, and there is a lot of room for the company to grow.
Pilots are an important part of advanced combat effectiveness. The training of pilots in our air force starts a new mode of "primary training aircraft going straight to higher education aircraft", and the training of naval shipborne fighter pilots is changed from "refitting mode".
Turning to "refit mode" and "growth mode" in parallel, the importance of advanced trainers is highlighted, and the company has a lot of room for growth. The company's higher education plane L15 has the typical characteristics of the third generation aircraft, with advanced digital flight control telex system and integrated avionics system, and its performance has reached the world's advanced level. It can be used to train the third and fourth generation pilots, and has a high ratio of training efficiency to cost. With the continuous installation of new aviation equipment, the company's higher education aircraft is expected to enter a period of accelerated growth.
Benefiting from the actual combat training, the defense business is expected to accelerate its growth. In recent years, the Central military Commission has repeatedly stressed the strengthening of actual combat military training and the enhancement of combat effectiveness. The company's defense business is expected to benefit from the continuous promotion of actual combat training and usher in accelerated growth.
Profit forecast and investment rating: maintain buy rating. It is estimated that the company's operating income from 2021 to 2023 is 9.029 billion yuan, 12.727 billion yuan and 15.443 billion yuan respectively, and the net profit is 282 million yuan, 381 million yuan and 525 million yuan respectively, and the corresponding EPS is 0.39,0.53 yuan and 0.73 yuan respectively. The stock price PE before the corresponding period is 118,87 and 63 times respectively, maintaining the buy rating.
Risk tips: 1) the trainer business development is not as expected; 2) the defense business development is not as expected; 3) the profit is less than expected risk; 4) systemic risk.