Zhitong Financial APP learned that Tianfeng Securities released a research report saying it was first given a "buy" rating by AVIC (02357), with a target price of HK $7.60. As the only flagship company of aviation high-tech military and civil general products and services in Hong Kong stock, its main business can be divided into four parts: aviation complete aircraft, aviation supporting systems and related business, aviation engineering services and aviation-related investment business. by controlling the four A-share listed companies, namely, Zhongzhi shares, Hongdu Aviation, AVIC Optoelectronics and AVIC Electronics, it is gradually improving the layout of the whole industry chain, including industrial investment, parts manufacturing and aviation aircraft. The effect of coordinated development is expected in the future.

The main points of Tianfeng Securities are as follows:

Helicopter plate-Zhongzhi Co., Ltd.: the main force of domestic helicopter manufacturing, complete and comprehensive product pedigree

Zhongzhi shares are the main force in the domestic helicopter manufacturing industry, which has formed a relatively complete product pedigree covering military and civil helicopters, from 1 ton to 13 tons, and the product pattern of "one machine, multi-model, series development". If the shares are successfully issued to acquire Changfei and Hafei Group assets, it will absorb China's military helicopter assembly platform. Helicopters play an indispensable role in various fields of military and civilian use in our country, but from the point of view of the number and proportion of combat helicopters in service, there is a large gap between our combat helicopters and the United States and Russia. With the research and development of new models and forensics, the demand for product upgrading is expected to bring long-term sustainable order guarantee for the company.

Trainer and Defense Plate-Hongdu Aviation: multi-dimensional layout of the integrated platform of "trainer + Missile + UAV"

Hongdu Aviation is the only system supplier with independent development and production capacity of full-spectrum products of primary, medium and advanced trainers in China. In 2019, Hongdu Group was introduced into the defense business of Hongdu Group to further expand the "UAV + Missile" related business. From the point of view of the quantity and amount of delivery, medium and advanced trainers have become the main body of the global arms trade market, and the demand of various countries for medium and advanced trainers is expected to increase greatly in terms of quality and quantity, while there is a large gap in China's domestic advanced trainers, and the company's products are expected to achieve rapid expansion.

Connector plate-AVIC Optoelectronics: military connector leader, the coordinated development of military and civilian products aims at the world first-class

AVIC's main products include electrical connectors, optical devices and optoelectronic equipment, cable components and integrated products, fluid devices and liquid cooling equipment, etc. the downstream customers of military products are all over aviation, aerospace, weapons, ships, electronics and other fields. Civilian products are related to 5G communications, new energy vehicles and rail transit fields. Connectors are the communication bridge of electronic circuits and the basic electronic components that constitute the whole electronic equipment. The company's products are expected to achieve rapid volume expansion with the development of mass production of new weapons and equipment, 5G communications and new energy vehicles.

Avionics plate-AVIC: avionics system specialization and industrialization development platform

AVIC Electronics is mainly engaged in avionics, covering defense aviation, civil aviation and advanced manufacturing. From a global point of view, the aviation airborne industry shows a systematic, integrated and intelligent development trend, the company intends to change shares to absorb and integrate AVIC mechatronics, realize the deep integration of avionics system and avionics system, and the core competitiveness of products is expected to be further improved. With the high requirements of the "Strategic Air Force" for the number and intergenerational installation of aviation equipment, the company is expected to meet the increase in the matching value of individual products, the increase in product demand and the permeability of matching models at the same time. Superimposed by the gradual landing of large domestic aircraft projects and the growth of the avionics system back-end maintenance market, the company's business may step into the track of rapid growth.

Risk Tips:Comparable companies are located in different exchanges, there is a certain valuation system difference risk; military pricing strategy leads to performance volatility risk; order and product structural adjustment risk; civilian market expansion progress is not as expected risk.