Event

Recently, AVIC Electric Test released its semi-annual report for 2021, with revenue of 1.035 billion yuan, an increase of 25.93 percent over the same period last year, and a net profit of 188 million yuan, an increase of 31.23 percent over the same period last year.

Brief comment

The business of aviation military industry, consumer electronics and intelligent logistics increased significantly. In the first half of 2021, the company achieved revenue of 1.035 billion yuan (+ 25.93%) and net profit of 188 million yuan (+ 31.23%) to the parent company, mainly because the company grasped the development opportunities of aviation and military industry, consumer electronics, intelligent logistics and other industries. We will resolutely implement various scientific research and production tasks of aviation military products, and continue to expand the promotion and application of our products in emerging markets. From a business point of view, the revenue of aviation military products is 248 million yuan (+ 64.10%), that of sensor control is 534 million yuan (+ 41.31%), and that of intelligent transportation is 218 million yuan (- 18.66%).

The gross profit margin of the company decreased slightly, the expense rate decreased during the period, and the overall profitability increased.

Due to higher labor and new material costs, the company's gross profit margin fell slightly to 37.94% (- 2.53pcts). At the same time, due to the impact of mass production, the cost rate decreased, the management expense rate decreased by 0.02 percentage points to 8.05%, the sales expense rate decreased by 1.97 percentage points to 5.30%, and the R & D expense rate decreased by 1.15 percentage points to 4.72%.

Purchase land in the new park of Xi'an High-tech Zone, increase investment in the construction of intelligent transportation industrial park, expand production capacity and develop intelligent equipment businesses such as measurement and control aviation military products, intelligent logistics, unmanned retail and so on. The auction in Xi'an is based on the company's long-term development plan, which provides a guarantee for the transformation and upgrading of future industries and products in Xi'an. It will help to strengthen the technological innovation and production capacity of intelligent equipment business such as measurement and control aviation military products, intelligent logistics and unmanned retail, further enhance the company's comprehensive competitiveness, and promote the company's sustainable development in the future. In line with the company's overall development strategy.

In terms of military products, the volume of the main models of downstream aviation products is expected to increase significantly during the 14th five-year Plan period. The main products of AVIC Electric Test military products include electrical measurement and control and airborne power distribution. With the delivery of key models of downstream customers and the smooth progress of key projects, airborne electrical measurement products are neck-to-shoulder with the distribution control system, with strong demand. In terms of civil products, the company's strain measurement field has been actively transformed and upgraded to the areas of logistics, health, testing and consumer electronics. The demand for related products has increased, especially in the field of consumer electronics, the demand for a key strain gauge project is still strong, promoting the steady growth of strain testing and control business. In the future, with the improvement of 5G and other basic technologies, the Internet of things and other technologies in industrial applications, the company as a leading company in the field of strain measurement is expected to benefit.

Profit forecast and investment rating:

The company is mainly engaged in intelligent measurement and control business, the company's main business sectors include aviation military products and motor vehicle testing and other civilian products, the downstream market boom is in the upward range. Benefiting from the growth of orders in the later period of the 13th five-year Plan for military products, the company's aviation military industry business has increased significantly; benefiting from the introduction of new environmental protection standards, the company's motor vehicle testing business contract orders have increased significantly. With the growth of the Internet of things industry, the company's strain measurement business has more room for development in intelligent logistics and so on.

It is estimated that the company's net profit from 2021 to 2023 is 3.38,4.31 and 547 million yuan respectively, an increase of 28.80%, 27.50% and 26.90% respectively over the same period last year. The corresponding EPS for 21 to 23 years is 0.57,0.73 and 0.93 yuan respectively, and the share price PE before the corresponding period is 32,25 and 20 times respectively.

Risk Tips:

The growth of military products fell short of expectations.

The growth rate of motor vehicle inspection business is lower than expected.

The growth rate of new businesses such as smart logistics is lower than expected.

The cost of labor has increased significantly, and the profitability of products has declined.