Performance review
1H22 performance is basically in line with our expectations
The company announced 1H22 results: revenue of 822 million yuan, up 8.8% year on year; realized net profit of 125 million yuan, up 3.7% year on year; net profit of Fumo was 122 million yuan after deduction, up 9.6% year on year. 2Q22 revenue was 461 million yuan, an increase of 8.9% over the previous year, an increase of 27.8% over the previous month; the net profit returned to the mother was 54 million yuan, down 38.2% from the previous year and a decrease of 24.7% from the previous month. The company's performance is generally in line with our expectations.
Revenue increased steadily in the first half of the year. 1) The general aviation transportation business achieved revenue of 782 million yuan, an increase of 5.4% over the previous year. Mainly due to the increase in the number of aircraft contracted and flight operations in the company's offshore crude oil business, the parent company achieved revenue of 640 million yuan, an increase of 4.9% over the previous year; 2) the general aviation maintenance business achieved revenue of 9.84 million yuan, a decrease of 21.4% over the previous year; 3) The financial leasing business achieved revenue of 29.9 million yuan (vs. 1H21 1.27 million yuan), mainly due to the increase in related project investment.
Profit margins are under slight pressure. 1H22 achieved a gross profit margin of 23.7%, down 5 percentage points from the previous year. This was mainly a 16.4% increase in operating costs due to increased labor costs, aircraft leases, aircraft guarantee fees, and aviation fuel consumption during the reporting period. During the reporting period, the company's sales expenses increased 264.7% year-on-year to 7.71 million yuan. This is due to the company's increased market expansion efforts, and labor expenses, travel expenses and communication fees increased. 1H22 achieved a net profit margin of 15.2%, down 0.7 percentage points from the previous year, less than the decline in gross margin. It mainly benefited from 1H22's other revenue of 60.42 million yuan (vs. 1H21 was 3.17 million yuan). The company received 57.54 million yuan in special funding for general aviation development in the first half of the year, while in 2021 it was received in the second half of 2021.
Development trends
We believe that high oil prices may continue to benefit the company's offshore oil business. Brent oil prices soared in 2022 and remained high overall. The year-to-date average oil price was 60.7% higher than the same period last year. We think the offshore oil business may continue to benefit from the high oil price environment.
Actively lay out the upper and lower reaches of the general aviation industry chain, and diversification continues to advance. The revenue of 1H22 subsidiary Haizhi Development increased 234.2% year-on-year, higher than the company's overall revenue growth rate. The company actively lays out segmented routes for general aviation operations, and diversified businesses such as emergency rescue, port navigation, offshore wind power, and drones continue to advance.
Profit forecasting and valuation
We keep the company's 2022-2023 profit forecast of 270 million yuan and 299 million yuan unchanged. The current stock price corresponds to a price-earnings ratio of 21.8/19.7 times 2022/2023. We keep our target price unchanged at 7.9 yuan, corresponding to 20.5 times the 2023 P/E. There is room for 4.1% upward compared to the current stock price, and maintain a neutral rating.
risks
Offshore oil demand fell short of expectations; new business expansion fell short of expectations; subsidies declined sharply.