2021 performance is in line with market expectations
The company announced 2021 results: income 60.296 billion yuan, YoY + 18.39%; return to the mother net profit of 2.369 billion yuan, YoY + 22.56%. The company's performance is in line with market expectations. The board of directors recommended a total dividend of 617 million yuan, or 0.08 yuan per share, an increase of 0.03 yuan per share over the same period last year.
Trend of development
The revenue of all business sectors increased, of which the aviation supporting business grew by 30%. 1) Aviation complete aircraft business: in 2021, revenue reached 20.388 billion yuan, accounting for 33.81% of the total revenue, accounting for 33.81% of the total revenue. Revenue from helicopters, trainers and general aircraft increased by 3.92%, 17.64% and 856.66%, respectively, to 176.66, 23.81 and 341 million yuan. 2) Aviation supporting business: realized income of 33.181 billion yuan, accounting for 55.03% of the total revenue, mainly due to the rapid growth of sales of avionics products and aviation parts products. 3) Aeronautical engineering service business: the realized income is 6.772 billion yuan, accounting for 11.16% of the total revenue. Overall, the aviation supporting business revenue growth is the fastest, driving the company's total revenue growth rate to increase 18.39ppt compared with the same period last year.
The improvement of profitability and the ability of cost control lead to the decrease of the expense rate during the period. 1) the gross profit margin and net profit margin of the company in 2021 were increased to 21.06% and 3.80%, respectively, and the profitability was improved. 2) during the period, the expense rate decreased from 0.60ppt to 13.10%, of which: the sales expense rate and the management expense rate decreased by 0.11ppt/0.17ppt to 1.14% and 5.96% respectively compared with the same period last year, and the ability of cost management and control continued to improve; R & D investment continued to increase, and R & D expenditure increased by 14.99% to 3.452 billion yuan compared with the same period last year. Financial expenses decreased by 49 million yuan to 165 million yuan compared with the same period last year, mainly due to the decrease in interest expenses and exchange losses of some subsidiaries in the current period.
Accounts receivable and contractual liabilities reflect the prosperity of the industry, and the cash flow situation has improved significantly. 1) the balance of accounts receivable at the end of the company's reporting period was 21.321 billion yuan, an increase of 20.24% over the end of last year, and the contract liability was 21.307 billion yuan, an increase of 24.34% over the end of last year. The sharp increase in accounts receivable and contract liabilities indicates that the company has full orders and strong demand from downstream customers. 2) the net cash flow of operating activities was 2.245 billion yuan, an increase of 1.384 billion yuan over the same period last year, mainly due to the increase in the return of receivables and the advance receipt of customer goods during the reporting period.
Profit forecast and valuation
We keep our profit forecasts for 2022 and 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 9.7 times 2023 / 8.3 times 2023. Based on the SOTP valuation, we maintain an outperform industry rating and a target price of HK $5.27, corresponding to 11.5 times 2022 and 9.9 times 2023 earnings, which is 18.4 per cent higher than the current share price.
Risk.
Orders and product delivery are not as expected; product price fluctuation risk.