Investment highlight
For the first time, covering aviation materials shares (688563) gives the industry a rating of outperforming industry, with a target price of 77.48 yuan, corresponding to 45.0x Pmax E in 2024. The company is a listed platform of Beijing Aeronautical Materials Institute of China, with four business plates: titanium alloy castings, rubber sealing materials, aircraft cockpit transparent parts and superalloy master alloy, which is a comprehensive industrialization platform for advanced aviation materials in China. The reasons why we are optimistic about the company are as follows:
With the accumulation of technology in the past 60 years, we have built a comprehensive industrial platform for aviation advanced materials under the Institute of Aviation Materials. Aviation materials stock consists of four major business departments, which is the comprehensive industrialization platform of aviation advanced materials under the Institute of Aeronautical Materials.
In recent years, with the development of domestic aviation and the repair of international civil aviation business, the company's performance has maintained steady growth. From 2020 to 2022, the revenue CAGR was 26.8%, and the home net profit CAGR was 25.03%. In 2022, the company achieved an income of 2.335 billion yuan. Titanium alloy castings / rubber sealing materials / aircraft cockpit transparent parts / superalloy master alloy accounts for 24%, 28%, 16% and 31%, of which special products contribute 74% of the income.
Focus on the main business of aviation special products, driven by the growth of the four major business sectors. 1) Titanium alloy casting:
The products produced by the company, such as aero-engine intermediate casing, compressor casing, engine assembly, etc., cover most of the domestic aero-engine models under development and production; 2) superalloy master alloy: the company has exclusive authorization of some cutting-edge grades of the Institute of Aviation Materials, and has 30 / 7 kinds of master alloy production capacity in the field of equiaxed crystal / directionally solidified superalloy. 3) Rubber and sealing materials: the company's main products of rubber and sealants include rubber materials, sealants, all kinds of rubber products, etc., which are widely used in aviation and other fields; 4) transparent parts: the company undertakes almost all the research and production tasks of transparent parts of third-and fourth-generation aviation equipment in China, and is in a leading position in the research and application of new transparent materials and new manufacturing technology.
Undertake the technology and channels of the Institute of Aeronautical Materials, raise investment projects to enhance the core competence. 1) the controlling shareholder of the company is AVIC Beijing Institute of Aviation Materials, which has been ploughing advanced materials such as aviation metal / non-metallic materials and composite materials for more than 60 years, and its assets / revenue / net profit in 2022 is RMB 141max / 74max, which is 1.4 times that of the listed company 3.5max. We believe that the company, as the only listing platform of the Institute of Aeronautical Materials, is expected to continue to undertake its high-quality institutions or assets. 2) the company announced that in July 2023, IPO raised a total of 7.1 billion yuan, of which 3.6 billion yuan was used for elastomer materials, aviation transparent parts, large aircraft windshield glass, high temperature master alloy, titanium alloy parts process upgrading and other projects, we believe that it is expected to alleviate the company's capacity bottleneck and further enhance the company's core competitiveness.
What is the biggest difference between us and the market? The market believes that the downstream of the company covers almost all the models of the company, and the subsequent performance growth is not very flexible; however, we believe that with the landing of the demand for new models of the downstream aviation and the continuous expansion of the company's ability to raise and put into production and the inclusion of Zhenjiang Titanium Alloy Company, it is expected to maintain the momentum of rapid growth.
Potential catalyst: accelerated downstream demand and order pace.
Profit forecast and valuation
We estimate that the company's 2023 EPS and CAGR for 2024 will be 1.29 and 32.3 respectively.
The current share price corresponds to 37.9x Pdebase E in 2024. Based on the company's good growth and high performance certainty, we give the "outperform industry" rating for the first time, with a target price of 77.48 yuan, corresponding to 45.0x Phand E in 2024, with a potential increase of 19%.
Risk
1) the risk of fluctuation in the purchasing price of raw materials; 2) the risk aggravated by market competition.