Incident: The company released its 2018 semi-annual report. From January to June 2018, the company achieved operating income of 77,07373 million yuan, an increase of 58.09% over the previous year; net profit attributable to shareholders of listed companies was 188.4952 million yuan, an increase of 106.15% over the previous year.
The aerospace business continues to grow rapidly, and the high-end manufacturing sector continues to expand. The company's aerospace business achieved revenue of 720.070.53 million yuan in the first half of the year, an increase of 65.48% over the same period last year. During the reporting period, the company continued to carry out in-depth cooperation with AVIC and Aviation Development Group, continuously expanding the military market on the basis of the original, expanding the arms market from single-piece production to large-scale delivery; cooperated with institutions such as the First Aerospace Academy, the Third Academy, and the Seventh Academy of Aerospace to actively participate in the development and batch production of new projects; participated in the early development work of COMAC C929 and CJ-2000; successfully passed the review of internationally renowned aircraft suppliers and actively carried out international business cooperation with Boeing, Airbus, Bombardier and other civil aircraft manufacturers. At the same time, the company has actively carried out in-depth cooperation with the 703, 719, and 725 companies of CSIC. The first 2.5 GW combustion engine cooperated with 703 has been successfully delivered, and small-batch production will soon begin; the paddles cooperated with 719 have been successfully delivered to the Jiangnan shipyard; and the full-sea deep-manned probes cooperated with 725 are being developed and tested. Furthermore, the company is actively expanding the rail transit market. It has now been included in the list of suppliers of key supporting enterprises in the rail transit sector in Sichuan Province, and has successfully participated in the production of Chengdu Metro Line 7, 10 and 6 car bodies. We believe that with the further improvement of the company's layout in the high-end manufacturing sector, it is expected that tomorrow's aerospace will continue to grow rapidly.
Decode the main aerospace manufacturing industry and focus on creating new profit growth points. The company announced a fixed increase plan in the first half of the year. It plans to raise no more than 1.5 billion yuan to invest in aerospace assembly plant projects, aerospace special process production line projects, and green power aviation propulsion system chassis intelligent manufacturing center projects. In addition, during the reporting period, the company's technology center invested more than 33 million yuan in scientific research to carry out research on cutting-edge manufacturing technology fields such as complete preparation technology for carbon fiber composites, industrial intelligence technology, green manufacturing technology, special processing technology, and non-destructive testing technology, focusing on building new profit growth points, with broad prospects for future development.
Profit forecast and investment rating: We expect the company's net profit to be around 601 million yuan, 801 million yuan, 1,005 million yuan in 2018-2020, EPS of 0.40 yuan, 0.54 yuan, 0.67 yuan, and corresponding PE of 19 times, 14 times, 11 times, maintaining the “buy” rating.
Risk warning: Aerospace business expansion fell short of expectations; losses in the agricultural machinery sector increased; fund-raising projects fell short of expectations.