Summary of the report:
The military industry development strategy, the prosperity of the military industry drives the steady growth of the military industry
In 2015, the company completed the acquisition of tomorrow Aerospace. From the composition of the main business, aerospace aircraft parts have accounted for 88.5% of the company's total revenue, becoming the company's first core business, with the gradual divestiture of agricultural machinery assets, the proportion is expected to further increase. The company enjoys a high gross profit level by virtue of its advantages of scale and advanced processing technology. with the further improvement of the proportion of aerospace business, the company's comprehensive gross profit margin is expected to be further improved. Factors such as the national defense budget, the domestic institutional environment, the national military development strategy, and the national security situation will drive the accelerated installation and upgrading of military aircraft, missiles and other weapons and equipment, and the company's military business is expected to maintain steady growth.
The military-civilian integration strategy is accelerated, and the company is expected to benefit as a model for civilian participation in the army.
The state has vigorously promoted the strategy of civil-military integration, and tomorrow Aerospace has been shortlisted for 50 military-civilian integrated large enterprise groups as a pilot unit for civil and civilian participation in the army. Tomorrow, Aerospace, as a model of civil service enterprises, is expected to receive relevant policies and fund support.
Expand civil aviation international subcontracting and domestic subcontracting business to create new profit growth points
2018 is the first year of the company's international subcontracting business. So far, it has signed a "long-term agreement for the supply of aviation products" with Safran and won the first order of US $89.7269 million for spare parts. At the same time, the company has discussed comprehensive cooperation with international well-known aviation companies such as Airbus, Boeing Co, Bombardier, Israel Airlines, GE, CFM, Pratt & Whitney and Roro, as well as their first-tier suppliers, and is expected to enter its supply system; at the same time, the company actively cooperates with Comac and Comac to expand aviation domestic subcontracting business to create new profit growth points.
Profit forecast and investment suggestion
It is estimated that the annual return net profit of the company in 2018-19-20 will be 8.74 yuan / 1.088 billion yuan, respectively, and the EPS will be 0.43 pound 0.59 yuan, respectively, and the corresponding PE will be times that of 22-16-13.
In view of the continued improvement in the military business, the international subcontracting business began to land, the company's valuation was low, the performance growth was high, and the "buy" rating was maintained.
Risk hint
The risk of delay in military orders; the landing of international subcontracting orders is not as expected.