Investment highlight
Once again, AVIC (02357) rated the outperforming industry with a target price of HK $5.27, corresponding to 11.5x Pmax E in 2022. The reasons are as follows:
The aviation industry is the only aviation industry chain listing platform with wide business coverage and scarcity. 1) the company controls four A-share listed companies, namely, Zhongzhi shares, Hongdu Airlines, AVIC Optoelectronics and AVIC Electronics, as well as a number of unlisted companies, such as AVIC Planning, AVIC Rongfu and so on. has formed a complete aviation industry chain, such as complete machinery, spare parts, engineering services, aviation-related investment and so on. 2) AVIC is the only one under the Aviation Industry Group that covers the whole aviation industry chain and continues to have the ability of business extension, which is scarce.
Helicopter and trainer machine business is in a leading position in China. 1) the company's helicopter has developed in a pedigree, forming a good pattern of "one machine, multi-type, series development". There is a big gap in the development of helicopters between China and the United States, and we think that there is a great potential demand for 10-ton helicopters in the next five years.
2) there are some problems such as few types of trainers in our country at present. The performance of the latest generation of advanced trainer developed and produced by Hongdu Aviation is better than that of Russian Jacques-130 and equivalent to that of Tmur50 in the United States, and its price is low. We expect a better development prospect in the future.
Avionics system benefits from the increase of equipment volume and value, and the connector market is in great demand.
The main results are as follows: 1) the avionics business is mainly undertaken by the subsidiary AVIC, and the proportion of the value of the downstream equipment superimposed avionics system increases, and the business growth is driven by double factors. 2) the technical level in the field of connectors is leading in China. AVIC's optoelectronic business includes three parts: aerospace industry connectors, communications and new energy. Benefiting from the acceleration of "new infrastructure" such as 5G, we expect the company's high-end connector business in the communications sector to usher in a period of rapid development.
What is the biggest difference between us and the market? With the volume of aviation equipment during the 14th five-year Plan period, AVIC's work is the target of the core aviation assets of the Aviation Industry Group, with strong certainty of performance growth, market recognition is expected to further improve and usher in a revaluation.
Potential catalysts: orders and deliveries exceed expectations.
Profit forecast and valuation
We estimate that the company's 2021, 2022 and 2023 EPS will be 0.32,0.39,0.46 yuan per share, respectively, and CAGR will be 19.2%. The current share price of the company corresponds to the company's share price of 8.2x Pax E, which is 9.5 pound in 2023. Considering that the company has a complete aviation industry chain and scarcity, we once again cover AVIC and give it a "outperform industry" rating based on the SOTP valuation method, with a target price of HK $5.27, corresponding to 2022 11.5/9.8xP/E 2023, with a potential increase of 21%.
Risk.
1) the risk of demand fluctuation of special products; 2) the risk of product development.