Summary of the report

The company announced on July 29th that in 2022 H1, the company's operating income was 96 million yuan (+ 10.07%), the net profit was 9 million yuan (- 26.60%), the non-return net profit was 9 million yuan (- 28.38%), the gross profit was 47.06% (- 2.78pcts), and the net profit was 9.87% (- 4.93pcts).

When the epidemic may affect the production and delivery of products, the company's income is seasonal, which is mostly concentrated in the reporting period of the fourth quarter. The company's operating income is 96 million yuan (+ 10.07%), the return net profit is 9 million yuan (- 26.60%), the non-return net profit is 9 million yuan (- 28.38%), the gross profit margin is 47.06% (- 2.78pcts), and the net profit rate is 9.87% (- 4.93pcts). We think that there may be the following reasons:

Some raw materials affected by the ① epidemic may not arrive at the factory on schedule, affecting the normal progress of production and delivery; at the same time, the prices and costs of some raw materials of the company have risen. ② 's product delivery acceptance is mostly concentrated in the second half of the year, especially in the fourth quarter (taking 2021 as an example, 2021Q4's operating income is 179 million yuan (- 8.94%), accounting for 58.69%). The company's inventory amount is 149 million yuan, an increase of 46 million yuan, mainly due to the unfinished delivery of products and the increase of goods issued, and the customer has not yet accepted the settlement. Compared with the same period last year, ③ 's management expenses and R & D expenses increased, which had a certain impact on the net profit.

In terms of expenses, the company's three-fee expense rate is 18.28% (+ 1.22pcts), of which the sales expense rate is 3.67% (+ 0.09pcts), the management expense rate is 15.58% (+ 1.67pcts), and the financial expense rate is-0.97% (- 0.54pcts).

The company's R & D expenditure was 6 million yuan (+ 53.71%), and the R & D expense rate was 6.61% (+ 1.88pcts), which was significantly higher than that of the previous year, mainly due to the increase in the salary of the company's R & D personnel during the reporting period. The overall scale of the company's R & D expenses is relatively low, mainly due to the entrusted R & D projects undertaken according to customer needs, and the related costs are not included in the R & D expenses.

The company's inventory is 149 million yuan (+ 45.19%), which is higher than that at the beginning of the year. Among them, goods issued (64 million yuan, + 32.03%) have not yet been checked and accepted by customers. Products (61 million yuan, + 63.25%) and raw materials (23 million yuan, + 48.97%) have all increased significantly. The increase in raw materials and products also shows that the company organizes production and actively prepares goods to cope with the rapid growth of downstream demand.

Take the core technology as the origin, diversify, multi-level product layout to expand the company's potential company based on the aviation field, as an important supplier of aircraft ground support equipment in the important mainframe factory under the Aviation Industry Group, in-depth excavation of the current and future needs of customers and end users, closely follow the model design and manufacturing process, deeply dig according to the potential needs of customers, and realize the coordinated development of product production, development and pre-research. At present, it has formed a diversified product structure with aircraft ground support equipment as the core, aircraft test and testing equipment, aircraft process equipment, aircraft parts processing, aircraft parts assembly and so on, providing customers with a variety of products and services. for the company to provide a number of profit growth points.

① aircraft ground support equipment

The company has been engaged in the R & D and production of aircraft ground support equipment since 2005. at present, various types of engine installation vehicles, hanging bomb trucks and other products independently developed have been widely supported in the active service of our air navy and many main models such as new generation fighter planes, bombers and transport aircraft. the company participated in the development and production of a certain type of automatic transport and hanging bomb truck as the first in China, successfully filling the gaps in related fields in the country.

Aircraft ground support equipment, as an important support equipment for military aircraft, has the characteristics of technology-intensive, which requires a long time of accumulation and technical reserve, not that shelf products can be replaced at will and used by supporting fighters. The company began to develop supporting support equipment at the design link of the source of the model project. And as the military market also has the characteristics of "preconceived", in the future, with the feedback from the military and the upgrading of fighter planes, the technical improvements of ground support equipment are generally completed by the original manufacturers, and the company has a strong first-mover advantage in this business field.

② aircraft process equipment

Relying on years of experience in the field of tooling design and manufacturing, and through many times of development and verification, the company has successfully applied the core subject technologies such as electromechanical-hydraulic integration and electro-hydraulic servo control to aircraft tooling business. realize the technology transfer from ground support equipment to process equipment, and further extend to flexible and digital tooling products on the basis of traditional tooling products. Up to now, the company has provided more than 100 sets of tooling for all kinds of aircraft: since 2013, the company has begun to produce large-scale digital tooling system, which has been successfully applied in the production line of important domestic aircraft. it includes the digital assembly system of the fuselage of a certain type of fighter, the digital measuring and attitude adjustment system of the landing gear installation of a certain type of transport aircraft and the digital attitude adjustment system for the finishing of the middle and outer wings of a certain type of aircraft.

③ aircraft test and testing equipment

Because the aircraft is flying in the air, the working environment is bad and the danger is high, the test and testing equipment is the important equipment for its manufacture, maintenance and maintenance. Based on the judgment of the development trend of the domestic aviation industry, the company has accumulated a number of core technologies, including flexible starting power supply technology, electromagnetic shielding technology, satellite communication and line-of-sight monitoring technology, respectively in the fields of power supply, electromagnetic shielding, communication monitoring, and so on, and further applied them to a number of comprehensive testing and protection projects. At present, the company has customized the design, development and production of a number of aircraft test and testing equipment, including: mechanical and electrical control and management computer processing system, comprehensive testing vehicle, ground command vehicle, data processing vehicle and so on.

④ aircraft parts processing

In terms of parts processing business, the company's aircraft parts processing business is mainly focused on the machining of aircraft leading edge ribs, middle ribs, partition frames, beams, girders, covers, thin-walled parts and other body parts, downstream covering a variety of fighter planes, bombers and civil aircraft models including ARJ21, C919, etc.

⑤ aircraft Department installation Service

As the threshold for participation in aircraft parts processing business is relatively low and the competition is relatively fierce, while ensuring the quality and progress of product delivery, the company extends further to the lower reaches of the industrial chain through tooling business to the field of part assembly. at present, the company has formed a relatively complete technical system in processing technology, tooling design and manufacturing, parts assembly and so on. On this basis, the company organically combines the above manufacturing and assembly experience with UAV product design, manufacturing and final assembly. During the reporting period, the Tianyi-1 UAV project developed by the company in cooperation with subordinate units of the aviation industry continued to move forward.

Generally speaking, the company relies on its own process technology accumulation and mature and stable business team, and further deepens the advantages of vertical integration industry chain through the coordinated development of aircraft tooling, parts processing and part assembly business. at present, the layout of the whole industry chain has been realized by "parts tooling, parts processing parts assembly and UAV".

The fog investment project is advancing steadily and the layout of the project under research is long-term.

Under the background of the sustained and rapid growth of the company's business scale, the existing production capacity is difficult to meet the needs of production and operation. The total investment of the company's aviation equipment and rotor aircraft manufacturing project is 550 million yuan, the construction period is two years, and at the end of the reporting period, the project capital investment progress is 15.97%, and the total annual income / profit is expected to increase by 450 million yuan / 144 million yuan after reaching production. The fund-raising project is expected to add 160 sets of equipment (sets). By increasing equipment investment and plant expansion, the company's core business production capacity, such as aircraft parts manufacturing, process equipment and aircraft support equipment, will be enhanced to further meet the needs of business development.

The company attaches great importance to the construction of the technological R & D system, training the technical team and improving the R & D system. The company's core technical personnel all hold shares in the company through Lilian Jiaxin, accounting for 2.34% of the company's total share capital. Through the way of entitlement incentives to further improve the work efficiency of the R & D team. In addition, the company has also actively introduced external advantage resources and carried out in-depth R & D cooperation with domestic high-quality scientific research institutes, including the Aviation Industry Group and the subsidiary units of the Aerospace Science and Industry Group, and the 54 Institute of China Electric Power Science and Technology. In terms of research projects, it mainly includes a certain type of aircraft landing gear, aircraft hanger, aircraft pods, Tianyi-1 UAV project and Shenguang-3 project.

The intracavity amplification project of the flake amplifier subsystem and so on, some of which have entered the experimental stage. With the orderly progress of the above-mentioned research projects, the company's product line in the aviation field is expected to further expand, and is expected to become a new profit growth point in the future.

Investment advice We believe that:

During the reporting period, ① 's performance declined due to factors such as product delivery acceptance and epidemic situation, but considering the rhythm of past delivery acceptance and the gradual weakening of the impact of the epidemic, steady growth is expected to resume in the second half of the year. ② closely tracks the model design and manufacturing process and deeply excavates the potential needs of customers. at present, it has formed a diversified product structure with aircraft ground support equipment as the core, aircraft test and testing equipment, aircraft process equipment, aircraft parts processing, aircraft parts assembly and so on, providing customers with a variety of products and services, and providing the company with multiple profit growth points. ③ 's fund-raising project is progressing steadily. After reaching production, the project will help the company to improve the production capacity of its core business, such as aircraft parts manufacturing, process equipment and aircraft support equipment, and further meet the needs of business development. And the company attaches great importance to the construction of technological R & D system, training technical team and improving R & D system. Through in-depth R & D cooperation with a number of domestic high-quality scientific research institutes, the product line in the aviation field is expected to be further expanded:

Based on the above point of view, we estimate that the operating income of the company from 2022 to 2024 will be 371 million yuan, 473 million yuan and 605 million yuan respectively, the net profit of returning to the mother will be 87 million yuan, 112 million yuan and 143 million yuan respectively, and the BPS will be 1.13,1.46,1.86 yuan respectively.

Risk hint: the progress of product project research and development is not as expected, the macro environment is depressed, and the downstream market expansion of the company's products is not as expected.