Main points of investment:
Based on the aviation field, high technology supports high profits. The company is based on the aviation field, the main products include aviation inertial navigation, aero-engine electronics and flight control system and so on. In 2017, the company's inertial navigation products achieved revenue of 106 million yuan, accounting for 59% of revenue and 52% of gross profit; aero-engine electronic products generated revenue of 46 million yuan, accounting for 26% of revenue and 25% of gross profit. The company's business is a technology-intensive industry, with high technical barriers and strong profitability. In 2017, the company's comprehensive sales gross profit margin reached 52%.
Inertial navigation is irreplaceable, with the help of aviation equipment to develop Dongfeng. As an autonomous navigation that does not rely on external information, inertial navigation plays an irreplaceable role in the field of aviation navigation.
The characteristics of strong discipline comprehensiveness, high precision and high reliability make aviation inertial navigation have higher technical barriers, which is the representative of high precision in the field of navigation. The company's products are mainly strapdown inertial navigation, compared with the platform, has the advantages of small size, high reliability, high performance-to-price ratio and so on. At present, China's national defense construction has a clear demand for aviation equipment, and the company is expected to fully benefit.
The layout of full authority control system has a broad prospect in the future. The aero-engine full-authority digital electronic control system has the advantages of strong computing power, accurate control, high reliability, easy to match the engine and integrate with flight control, which is the development trend of aero-engine control devices. it is also a key technology in urgent need of development in our country. The engine electronic control system undertaken by the company has completed the project acceptance in the pre-research stage, and is expected to form model products to achieve mass production in the future, with broad prospects for development.
Profit forecast and investment rating: buy rating. The company's business focuses on aviation inertial navigation, engine electronics and other high-end application fields, with the help of China's aviation equipment industry development Dongfeng, the company has broad prospects in the future. It is estimated that the net profit of homing from 2018 to 2020 is 58 million yuan, 68 million yuan and 77 million yuan respectively, the corresponding EPS is 0.65,0.75 yuan and 0.86 yuan respectively, and the corresponding share price PE is 48 times, 41 times and 36 times respectively.
Risk tips: 1) the demand for inertial navigation products is lower than expected; 2) the development of full-authority digital electronic control system is not as expected; 3) the company's profit is lower than expected; 4) systemic risk.
