Private leading enterprises of aviation parts and components, focusing on aerospace manufacturing. Chengdu Aleda Aviation Manufacturing Co., Ltd. was established in 2004 and listed on the growth Enterprise Market of Shenzhen Stock Exchange in 2017. The company specializes in the field of aerospace manufacturing, mainly engaged in the precision manufacturing of military aircraft, civil aircraft parts, aero-engine parts and large aerospace structures, with the full-process manufacturing capability of aviation parts. The company's main business is: CNC precision machining of aviation parts, special process processing and assembly of parts. Products include aircraft nose, fuselage, wings, tail and landing gear and other parts related parts, engine parts and aerospace large structural parts.

Both revenue and profit are increased and cash flow is abundant. On the evening of April 19, 2022, the company released its annual report and first quarter report in 2021. In 2021, the company realized operating income of 614 million yuan (year-on-year + 102.12%) and net profit attributed to the parent company of 255 million yuan (year-on-year + 86.47%). In the first quarter of 2022, the company realized operating income of 177 million yuan (year-on-year + 63.10%) and net profit belonging to the parent company of 66 million yuan (year-on-year + 40.95%). The 21-year operating cash flow increased from-24 million yuan to 250 million yuan, up 1140.2% from the same period last year. The net increase of cash and cash equivalents in 21 years increased by 1100.54% compared with the same period last year, mainly due to the increase in sales and rebates in the past 21 years. At the same time, the funds for raising shares issued by specific targets are in place. On the whole, the company continues to steadily promote various businesses, the new production capacity of precision CNC processing is released one after another, the operating cash flow changes from negative to positive, and the money is abundant.

The core suppliers of AVIC's subordinate units, accounts receivable continue to grow, and the turnover rate of accounts receivable in 21 years is the highest in the past five years. With the continuous expansion of the company's business scale, the amount of accounts receivable and bills is relatively large, with 21/22Q1 accounting for 23.80% of assets, accounting for 32.01%. 21/22Q1 notes receivable and accounts receivable 4.53 million yuan, + 49.32% debacle 70.10%, mainly due to military customers, military customers have good credit, there have been no bad debts. The 21-year turnover rate of accounts receivable was 1.68, which was + 15.86% compared with the same period last year, the highest in the past five years, reflecting the improvement of the company's speed of repayment.

Projects under construction in 21 years are + 785.50% compared with the same period last year. When capacity expansion is carried out, it provides support for future revenue. The company's 21/22Q1 project under construction is 0.65 million yuan, which is 48.78% compared with the same period last year. In September 2021, the company's Xindu branch / subsidiary CNC business was put into operation, and gradually released CNC production capacity. In August 21, 500 million yuan of refinancing was completed by issuing shares to specific objects. The aviation parts intelligent manufacturing and system integration center project has a construction period of two years, partial production in the third year, production in the fifth year, and an estimated annual production income of 234 million yuan. The project is progressing smoothly, from 9.30% in the middle of 21 years to 17.25% at the end of 21 years, which will lay a solid foundation for the double upgrading of the company's production capacity industry in the future.

Profit forecast and investment rating. We estimate that the EPS for 2022-2024 will be 1.59 / 2.31 PE 3.12 yuan. Combined with the comparable company's PE valuation, the company will be valued at 35 times PE in 2022, corresponding to a target price of 55.65 yuan, with a "better than the market" rating for the first time.

Risk tips: the progress of project construction is not as expected; the risk of price reduction brought about by intensified competition in the industry; the scale of military expenditure or the progress of equipment installation is not as expected.