3Q20 performance meets expectations
The company announced the first three quarters of 2020 results: revenue 700 million yuan, YoY + 24.26%; return to the mother net profit-16 million yuan, YoY-131.96%, deducted non-return net profit is 20 million yuan, YOY+77.40%. 3Q20 realized revenue of 290 million yuan in a single quarter, YOY + 34.90%, net profit of 24 million yuan and YOY + 576.90%. The performance is in line with our expectations.
The company's single-quarter net profit in the first three quarters was-48 million yuan, 8 million yuan and 24 million yuan respectively, gradually improving in the quarter.
An increase in receivables / prepayments and an increase in capital for Sichuan Airlines Corret. 1) at the end of the third quarter, bills receivable by the company were 42 million yuan, an increase of 273.46% over the beginning of the year, mainly because the number of acceptance bills received was higher than that at the beginning of the year. 2) at the end of the third quarter, the company paid 37 million yuan in advance, an increase of 170.7% over 1400 yuan at the beginning of the year, mainly due to the company's preparation for later production and sales and an increase in the purchase of materials in advance. 3) at the end of the third quarter, the company's other receivables totaled 36 million yuan, an increase of 169.93% over the beginning of the year, mainly due to the payment of the aircraft deposit, while last year was caused by the recovery of the aircraft deposit. 4) at the end of the third quarter, the company's long-term equity investment was 77 million yuan, an increase of 80.67% over the beginning of the year, mainly due to an increase of 31.53 million yuan in Sichuan Airlines Corret Company.
Net cash inflow from operating activities. The net cash flow of the company's operating activities in the first three quarters was 43 million yuan, down 64.26% from the same period last year, mainly due to the influence of the rhythm of individual customer industry rebates, sales rebates decreased by 26.91 million yuan over the same period last year, and cash payments for the purchase of materials increased by 25.72 million yuan over the same period last year. Due to the difference in tax rebate time, the tax rebate received in the current period decreased by 11.8 million yuan compared with the same period last year.
Trend of development
The performance of aviation core equipment is sound, and the microelectronics plate is the bright spot. 1) the company is the only civil aviation engineering and technical service enterprise in China with licenses such as CAAC, EASA, FAA, etc. In terms of equipment support, the capabilities of aviation development and APU support are growing rapidly. In May 2020, Tianjin Haite, a subsidiary, obtained the license to change FAA to B737-800STC. 2) on September 15, 2020, the subsidiary Ansheng (Tianjin) Flight Simulation system Co., Ltd. won the bid "Shanghai aircraft Design and Research Institute ARJ Series aircraft Man-in-the-Loop Flight Simulation platform-basic platform bidding Project" with a winning amount of 22.58 million yuan. 3) after years of technology accumulation, the Microelectronics Business Department has made technological and market breakthroughs in 5G chips, silicon-based gallium nitride devices, optoelectronic VCSEL, filters and installable products.
Profit forecast and valuation
Due to the impact of the epidemic and the fluctuation of the stock price of holding Guiyang Bank, the fair value has changed greatly. We have lowered the 2020 prime net profit of 87.4% in 2021 to 10.78 million yuan / 57.41 million yuan, corresponding to 3.0x Pmax B in 2021.
We keep our neutral rating unchanged and the target price unchanged at 12.85, corresponding to 2.69 times Pmax B in 2021, with a potential downside of 10.7%.
Risk.
Systemic risks in the market; lower-than-expected delivery of products and orders; price fluctuations of financial products held, etc.