Main points of investment

21H1 revenue increased by 21% over the same period last year, and net profit from home increased by 493% over the same period last year. 2021H1 realized revenue of 2.69 billion yuan (+ 21%), net profit of 57.79 million (+ 493%), and non-return net profit of 11.02 million (+ 25%). The main non-recurrent profit and loss during the reporting period was the steady return of unemployment insurance during the epidemic prevention and control period totaling 47.03 million yuan.

2) in terms of products, the revenue of trainers is 1.21 billion yuan (+ 39%), that of other aviation products is 1.39 billion (+ 13.4%), and that of non-aviation products is 89 million (- 25%). The company further focuses on its main business.

The operating cash inflow increased by 32 times, and the balance sheet showed that the company had full orders. 1) the net operating cash flow for the current period was-9.74 million, which was significantly better than-520 million in the same period last year: the cash received for the provision of goods / services was 10.1 billion (+ 3206%). The cash paid for the purchase of goods / services is 9.9 billion (+ 1430%).

2) the balance sheet shows that the company has full orders: the contract liability at the end of the period is 7.3 billion, which is 485% higher than the same period last year; the prepaid account is 5.7 billion, and the inventory is 3.6 billion, 50.4% higher than the same period last year.

3) the company's operating cash inflow and outflow and the substantial expansion of contract liabilities may show that the company has signed a large order and received the corresponding advance payment, and the subsequent production and marketing scale is expected to increase rapidly.

Company: the current minimum market value aviation mainframe, or the largest variety of medium-and long-term flexibility 1) products: Jiao 10 is the most advanced trainer in China, and the key to the implementation of the new "two-plane-three-stage" coaching system. Enjoy the double benefits of "industry growth + share increase". Defense products rely on the aviation industry's only air-to-surface missile research institute, driven by "new fighter aircraft assembly + increased consumption of actual combat training". Demand is more urgent 2) the company: previously, affected by the relocation of the aviation city, production capacity has been gradually eliminated, capacity release is imminent, scale effect is expected to appear, profitability trend upward.

3) long-term: teach 10 "one machine multi-function", can be transformed into attack aircraft multi-purpose fighter, broad space can be expected.

Profit forecast and valuation: the compound growth rate of net profit in the next 3 years is expected to exceed 67% 1) the company's net profit from 2021 to 2023 is estimated to be 2.14.0 / 620 million yuan, an increase of 61% 86%, 57%, 0.30, 0.55, 0.87, 0.55, and 1.8 times for PE and PS, respectively, for the year-on-year increase of 61% 86%, 0.55 and 1.8 times, respectively. With reference to the history of the company, the PS valuation center is 4.6 times, and the company, as the sole supplier of the core equipment of the "two-aircraft-three-level" coaching system in China, the broad space for Jiao 10 and its derivative modification, as well as the high flexibility of the missile business, continue to recommend to the subsidiaries.

Risk tips: Jiao 10 and defense products production and sales are not as expected; the scale effect of product volume is not as good as expected.