Main points of investment
Event: the company released its annual report in 2017, achieving operating income of 1.504 billion yuan, an increase of 32.72%, a net profit of 10 million yuan, a decrease of 82.13%, a basic earnings per share of 0.03 yuan per share, and a weighted average return on assets of 1.16%.
Performance is in the rebound channel, but profits have declined significantly. The company fully implements the strategy of focusing on the main business, and its main business is located in three major sectors: security technology, medical devices and electronic information. In 2017, the company achieved an operating income of 1.504 billion yuan, an increase of 32.72% over the same period last year, and a net profit of 10 million yuan, an increase of 82.13% over the same period last year.
The company's three major businesses, security technology, medical devices and electronic information, account for 68.96%, 15.47%, 14.17%, respectively. The gross profit margin of the main business is 18.94%, which is 3.41% lower than that of last year. In terms of period expenses, the sales expenses are 58.3182 million yuan (+ 16.87%), the management expenses are 159 million yuan (+ 13.3%), the financial expenses are-3.317 million yuan (- 68.78%), and the net cash flow generated by operating activities is-83.4777 million yuan (- 193.93%). The main reason for the decrease in the above indicators compared with the same period last year is that the company has implemented the strategy of strengthening enterprises with talents and strengthened talent incentives, resulting in a substantial increase in labor costs compared with the same period last year, and because some of the security projects in the current period have not been refunded at the end of the period due to the long settlement cycle of the project, resulting in a substantial increase in the provision for bad debts by age compared with the same period last year.
After many capital operations, it focuses on the three main industries of security, medical care and electronic information. At present, the company mainly focuses on the three major businesses of security technology, medical devices and electronic information, the products are related to safe cities, security science and technology construction, emergency anti-terrorism, land and border defense, public security and police informatization, production safety supervision, medical devices, medical information, operating room engineering, special computers, infrared optoelectronic products and other business areas. In 2017, the income concentration of the three main industries increased to more than 99%. We believe that in 2018, the company will continue to focus on the three main industries, and the performance of the three major industries will achieve steady growth.
The overall asset securitization rate of Aerospace Science and Industry Group is low, and as the only listed company controlled by the second Institute of Aerospace Science and Industry, the value of the platform is prominent. The controlling shareholder of the company is the second Academy of Aerospace Science and Industry, which accounts for 36.25% of the annual report data as of 2017. The convening of the first meeting of the military-civilian Integration and Development Committee and the restructuring of the first batch of 41 military scientific research institutes launched by the State Administration of Science, Technology and Industry for National Defense have demonstrated the determination of the upper levels to reform the military industry, and the restructuring of the institutions and the integration of the military and the people have been accelerated. Among the major military industrial groups, the overall asset securitization rate of the Aerospace Science and Industry Group is currently at a low level, less than 25%. Compared with China's electronics, AVIC, weapons and other military industrial groups, there is still much room for improvement. In this context, we believe that as the only listed company controlled by the second Institute of Aerospace Science and Industry, the value of the platform is prominent and is expected to benefit.
Profit forecast and investment advice: we predict that the company's realized income from 2018 to 2020 will be RMB 1.992 million, an increase of 32.43%, 31.28%, 33.20%, and a year-on-year increase of RMB 0.45 million, an increase of RMB 0.51 million, an increase of 332.16%, 15.42% and 10.37%, respectively, and a corresponding EPS of RMB 0.13, 0.16 and 0.17 in 18-20 years. Maintain a "buy" rating.
Risk hints: intensified market competition, national policy risk, high valuation risk.