Event: 1) the company released its annual report for 2017, with an annual operating income of 1.853 billion yuan, an increase of 3.48% over the same period last year, a net profit of 405 million yuan, an increase of 61.57% over the same period last year, and a net profit of 314 million after deduction, an increase of 39.54% over the same period last year. Corresponding to earnings per share of 0.27 yuan. 2) the company released its quarterly report for 2018, with operating income of 197 million, an increase of 131.7% over the same period last year, a net profit of 50 million, an increase of 7387.86% over the same period last year, and a deduction of non-net profit of-16 million, a decrease of 49.39% over the same period last year. 68 million of the profit or loss on the disposal of non-current assets was recorded during the reporting period.
Comments: 1) the company's revenue growth was relatively small in 2017, due to a sharp drop in revenue from the company's agricultural machinery sector by 69.88%; profits increased significantly because the company's revenue from aerospace aircraft parts reached 1.64 billion, a year-on-year increase of 51.48%. And the product gross profit margin increased by 5.34% over the same period last year, and the company received 110 million government subsidies to be included in the profits and losses of the current period. 2) in 2017, the first phase of the company's "Digital Workshop for Aerospace large complex structures" and the "Rapid Manufacturing and Research Center for High Precision complex Aerospace structures" were completed and put into use one after another, and the production capacity was further expanded.
The "Hebei Aerospace products Base", "Xi'an International Business Industrial Base", "Guizhou Aviation products Southwest Base" and "Tianjin New material Product Base" are progressing smoothly and have been put into production and operation; the Shenyang Aviation products North Base has been successfully established. 3) in the first quarter of 2018, tomorrow Aerospace continued to strengthen cooperation with major mainframe manufacturers, and defense sector business continued to maintain rapid growth. The main business revenue was 170 million, an increase of 241.19% over the same period last year. The international subcontracting business has made a breakthrough. At present, sample production of various projects has been started, and negotiations on long-term cooperation agreements with large companies in the international aviation industry have been carried out one after another.
The company is the leader of aerospace civilian participation in the army, benefiting from the rapid growth of aerospace military products. According to World Air Force statistics, the total number of US military aircraft is 4.5 times that of China, of which the number of fighter planes is 2 times that of China, the number of military transport aircraft is 5.5 times that of China, and the number of military helicopters is 7 times that of China. The gap in quantity and structure of China's military aircraft urgently needs to be made up, and the next ten years will be a golden period for the rapid development of China's aerospace field. The company has established supporting relations with China's major aerospace mainframe factories and research institutes, and has undertaken the task of developing, finalizing and mass-producing certain types of aerospace products, involving nearly 10,000 varieties of parts, components and parts. for the aerospace industry has the largest scale of high-end manufacturing equipment, the most professional, the largest variety of aircraft parts manufacturing private enterprises The successive batch production of new models will directly drive the growth of the company's business scale.
Expand civil aircraft business and carry out international business cooperation. The company takes the Comac C929 project as the traction, and takes the key components and large sections of large aircraft composite materials as the starting point to carry out international business cooperation. Negotiate comprehensive cooperation with international well-known aviation enterprises such as Airbus, Boeing Co, Bombardier, Israel Airlines, GE, CFM, Pratt & Whitney and Roro, as well as their first-class suppliers; actively participate in the pre-development of Commercial Development CJ-2000 to seize the domestic large aircraft and international subcontracting mainstream market. Signed a "long-term agreement for the supply of aviation products" with Safran Group, and won the first batch of spare parts manufacturing orders with a total value of US $89 million. At the same time, there is a huge demand for aircraft procurement in China's civil aviation in the future, and the capacity cooperation mode of civil aviation procurement will promote the further transfer of international aviation subcontract orders to China.
The agricultural machinery industry has entered a period of deep adjustment and actively developed new products. The central subsidy for the purchase of agricultural machinery was reduced to 18.6 billion yuan in 2017, 5 billion yuan less than in 2016.
In the current agricultural machinery industry downward, the company adhering to the concept of technology-first research and development, combined with the market to improve the competitiveness of products. The company develops a variety of key models and unswervingly makes good products; the company changes its sales strategy, implements a full-money machine purchase policy, reduces the proportion of receivables, strengthens the collection of receivables for more than one year, and minimizes losses in the general trend of unfavorable business environment; subordinate manufacturing subsidiaries strive to improve the income of outsourcing processing business to cope with changes in the industry.
Profit forecast and investment advice: considering that the company not only enjoys the dividend of the increase in the growth rate of the aerospace industry, but also enjoys the huge performance flexibility as an upstream outfit. Coupled with the company's international subcontracting of civil aircraft, the layout of domestic C919 and C929 large civil aircraft, business development in the field of commercial aerospace, and other business categories in the aviation manufacturing industry, including composite materials, we are strongly optimistic about the company's future performance growth and long-term development space. We predict that the company's eps for 2018-2020 will be 0.44 PE 0.66 won 0.88 yuan, corresponding to the double of PE in 22-14-11, and will continue to give a "highly recommended" rating.
Risk hint: the mass production of equipment is not up to expectations.