What happened: the company announced today that on October 13, 2015, AVIC, the actual controller of the company, informed AVIC that according to the arrangements of the relevant state departments, the reorganization and integration plan of the business of aero-engine-related enterprises under AVIC is being worked out, which involves the change of the actual controller of our company. AVIC is no longer expected to be the actual controller of the company. The company believes that the above arrangements will not have a significant impact on the normal production and business activities of the year. After inquiring with the company's controlling shareholders, actual controllers and relevant departments, the above matters will not involve matters related to the major asset restructuring of the company in the near future. According to the relevant regulations, upon application, the shares of the company will resume trading on October 14, 2015.
In this regard, our comments are as follows:
The establishment of the engine company is on the brink: this announcement makes it clear that AVIC is no longer expected to be the actual controller of the company. at the same time, two other AVIC engine business-related companies, AVIC Power and AVIC dynamic Control, also issued similar announcements, which further verified our previous expectation that the state would integrate the aero-engine business and establish the National engine Company. That is to say, it is equivalent to raising the aero-engine to the same level as the aircraft. if we pay attention to it from the national level, the status of the engine will be significantly improved and its development will be strongly guaranteed.
Major engine projects are expected to be announced in the near future: similar to the relationship between large aircraft projects and Comac, we expect this engine business integration to be closely related to major engine projects. Previously, the aero-engine project, known as the "China Heart", was included in the 2015 government work report for the first time. The key projects mentioned in the annual government work report will be effectively implemented in the follow-up. Therefore, the special support policy is about to come out, and we expect that the major project will be on a scale of 100 billion yuan, and its investment cycle may be shortened to less than 10 years, or even to 5 years, and the investment intensity will be greatly increased. We expect that this scale of investment should last for 20 years or more. In the next 20 years, China's final investment in the aero-engine field may be as much as 300 billion yuan, which will bring about a rapid development and progress of the aero-engine industry. The three engine plate companies have issued a relatively clear announcement, so we expect major projects to be announced in the near future.
The company will benefit from the increase in investment and attention in the industry: on the one hand, as one of the troika of the aero-engine plate, it will fully benefit from the input support of major national projects, and at the same time, as the company with the smallest volume, will get greater flexibility; on the other hand, it is expected that the engine plate will once again receive market attention, and the company will also benefit.
Profit forecast and investment advice: we expect the company's 2015-2017 income to be 21.58,25.79 and 3.199 billion yuan, up 9.94%, 19.53% and 24.02% over the same period last year; and the net profit of shareholders belonging to listed companies is 0.63,0.79 and 115 million yuan, up 111.72%, 25.93% and 46.05% over the same period last year, corresponding to EPS of 0.19,0.24,0.35 yuan. Maintain the company's target price of 50 yuan and maintain the "buy" rating.
Risk hint: the development of key aero-engine models is slow, and the valuation of military units is on the high side.
