Event: the company announced on July 26 that it intends to sign a "Strategic Cooperation Framework Agreement" with Jincheng Nanjing Mechanical and Electrical hydraulic Engineering Research Center. in the future, the two sides will conduct strategic cooperation around the production of aviation parts such as military and civil aircraft (including C919) and the assembly of aviation hydraulic products. The company announced on August 27 that it plans to invest 200 million yuan to set up a wholly-owned subsidiary Jiangsu Lantian Mechanical and Electrical Co., Ltd., and plans to build a flexible production line for aviation parts and flexible assembly lines for aviation products.
Main points of investment:
Hand in hand with Nanjing Mechanical and Electrical hydraulic Engineering Research Center to shape a stronger core competitiveness company and Jincheng Nanjing Mechanical and Electrical hydraulic Engineering Research Center (hereinafter referred to as "Nanjing Mechanical and Electrical") signed the Strategic Cooperation Framework Agreement on July 24, 2021. In the future, the two sides will carry out strategic cooperation around the production of aviation parts such as military and civil aircraft (including C919) and the assembly of aviation hydraulic products. In the process of cooperation, Nanjing Mechatronics needs to provide the company with various technical support, including product realization plan, technical guidance, product quality inspection, professional staffing, technical upgrading and so on. Nanjing Mechatronics is the R & D center and production base of aviation airborne electromechanical systems in China, focusing on aircraft electromechanical control systems, hydraulic control systems, fuel systems, environmental control systems, second power systems and other fields. with complete pre-research, model development, design and manufacture, test delivery and maintenance services, it has successively provided products and accessories for more than 60 models and 37 major mechanical and electrical systems.
In order to better realize the strategic cooperation with Nanjing mechanical and electrical, the company issued a notice on August 27 to set up a wholly-owned subsidiary Jiangsu Lantian Mechanical and Electrical Co., Ltd., with an investment of 200 million yuan, and to build two new production lines, which are flexible production lines for aviation parts and flexible assembly lines for aviation products. Nanjing Mechatronics will give priority to purchasing aviation parts and hydraulic fuel tanks, hydraulic selection valves and other aviation products from the company under the same conditions.
The company specializes in the process R & D and manufacturing of aerospace parts, and has undertaken the process design and manufacturing of various types of aerospace parts, involving aircraft fuselage, wing, tail, engine, landing gear, electromechanical system, avionics system and so on. It is a private aerospace parts manufacturer with comprehensive processing capabilities of body parts, engine parts and airborne equipment parts. In this cooperation, the technical support provided by Nanjing Mechatronics to the company will help the company's continuous accumulation, effective integration and optimal allocation of business and technology in the aviation manufacturing field, and further enhance the company's core competitiveness.
In addition, in this strategic cooperation, the company will cut into the field of civil aircraft aviation parts and aviation hydraulic products to further expand the company's industrial layout in the field of civil aircraft. From the perspective of the overall market space of the civil aircraft industry, according to the Annual Market Forecast report of Comac of China (2020mi 2039)
Data show that by 2039, China's aviation market will receive 8725 passenger aircraft with more than 50 seats, worth about 8.97 trillion. We believe that with the growth and growth of China's civil aircraft industry, as well as the domestic replacement ushered in a period of historical opportunities, the market space of each link of the industrial chain will be further enhanced, and the company is expected to benefit deeply.
The main engine factory carries out "small core, big cooperation" and pays attention to the great opportunity of the core supporting enterprises under big cooperation, which may become the harvest and blowout period of weapons and equipment construction during the "14th five-year Plan" period. the progress of production expansion of aviation mainframe factory can not meet the growing demand for orders, and some business spillovers, promoting the rapid development of upstream private supporting enterprises.
The socialization of general capabilities under ① 's "small core, big cooperation" to promote the gradual formation of the aviation industry ecosystem focusing on the main industry is one of the main development focuses of the central military enterprises in recent years. At the meeting of the heads of the central enterprises held on December 24, 2019, the importance of strengthening the main industry and professional integration was once again emphasized. "small core, big cooperation" has gradually become the strategic orientation of military enterprises. According to the development strategy of "small core, big cooperation, specialization and openness", the mainframe factory needs to focus on the strengthening of core competence and gradually withdraw from the general capability manufacturing business. position itself as a military aircraft industry base with R & D, assembly, test flight and core parts design and manufacture as the core, changing from "aircraft manufacturer" to "system integrator" and with strong versatility. The fully competitive business of parts processing (NC machining / sheet metal forming), tooling manufacturing, component assembly and equipment maintenance has shifted to social enterprises, and finally reached the aviation industry ecological circle with the organic combination of "mainframe integration + professional matching + social service". According to the data of the 2020 Social responsibility report of the aviation industry, at present, the socialized matching rate of the average general capacity of mainframe factories has reached 75%. It is expected that during the 14th five-year Plan period, the progress of production expansion of mainframe factories is difficult to keep up with the growing demand, speed up the release of social production capacity, and build an industrial chain ecology of "small core, big cooperation" has become the only way. It has further increased the market space for the supporting business of civilian military enterprises.
Under the great opportunity of ② collaboration, the technical level of the company has been gradually improved and the process has been continuously improved. Scale effect is expected to show that due to the characteristics of many links, complex processes, strong professionalism, high precision requirements and high linkage with the mainframe factory in the field of aviation parts processing, the overall competition pattern is relatively stable. When undertaking the order task, the capacity building of special technology, flexible production capacity and scale effect under capacity expansion are the main ways to reflect the competition barriers of related enterprises in the industry.
Since its establishment, the company has formed a number of core technologies in the field of aviation parts processing, constantly improving the technical level in material identification, process design, parameter selection, machine programming, tooling design, tool selection, processing environment control, etc. the complexity and accuracy of the system processing products continue to improve, and the company is still actively enriching the types of processes, so far it has completed fluorescence non-destructive testing and X-ray non-destructive testing. The capacity building of special processes such as brazing of aluminum and magnesium materials is a step closer to realizing the whole processing process of aviation parts.
In terms of production capacity, in addition to the two new flexible production lines for aviation parts and aviation products, the first phase of the five-axis and five-linkage turning-milling compound center under construction has been officially put into production, with a total of 8 equipment put into use. in total, the annual production capacity of high-precision CNC machining has been increased by 483000 hours (including 42300 hours of five-axis machining capacity and 600,000 hours of high-precision vertical CNC lathe production capacity). The industrialization project of intelligent manufacturing of aviation core components is also being gradually promoted. It is expected that after it is put into production, the company's R & D capacity of large-scale structural components will be further enhanced, the level of flexible production will be enhanced, and the annual production capacity is expected to increase by 66400 hours. The annual income will be increased by 264 million yuan. In the case of the continuous increase in the company's production capacity, the scale effect is expected to be further amplified.
Investment suggestion
We believe that the company holding hands with Nanjing Mechanical and Electrical hydraulic Engineering Research Center will enhance the company's core competitiveness from many aspects, such as the continuous expansion of industrial layout, the continuous accumulation of technology and effective integration, and the company is expected to fully benefit from the "small core" business expansion opportunities under big cooperation to further open up the company's growth space.
Based on the above point of view, we estimate that the company's operating income from 2021 to 2023 will be 309 million yuan, 353 million yuan and 500 million yuan respectively, the net profit will be 54 million yuan, 65 million yuan and 104 million yuan respectively, and the EPS will be 0.48,0.58,0.93 yuan respectively.
Risk hint: the progress of product project research and development is not as expected, and the macro environment is depressed.