The company is the leader of domestic aviation materials distribution, under the high qualification barriers of the industry, the company relies on the first batch of first-mover advantages to pass the whole process certification, carry out high-viscosity cooperation with suppliers and customers, and continue to consolidate its leading position. Civil aviation domestic substitution has become an inevitable trend of development, the company takes the deep participation in domestic large aircraft projects as an opportunity to lay out the localization of aircraft materials and self-research transformation, increase the construction of domestic aircraft materials production capacity projects, and open the second growth curve. We forecast that the company's net profit from 2023 to 2025 will be 0.98 million yuan per share, respectively, with a target price of 54 yuan per share (35 times PE in 2024). Cover for the first time, giving a "buy" rating.
Domestic aviation materials distribution leader, the performance ushered in the repair inflection point. The company's main products include aviation fuel, aviation raw materials and aviation chemicals, as well as ground support equipment. Due to the low degree of localization of aircraft materials, the company's aviation materials business is still based on distribution. It is the first listed aviation materials distribution company in China and even in the Asia-Pacific region. The prosperity of the aviation materials industry is closely related to the downstream civil aviation market. As the domestic civil aviation industry has taken the lead in returning to the boom since 2023, the company's performance has come out of the "dark moment" and ushered in a repair inflection point, and the net profit deducted from non-homing has increased by 40% in the first half of 2023 compared with the same period last year.
High qualification barriers bring high barriers to entry, and the industry leader has a significant competitive advantage. The aviation industry places great emphasis on safety and airworthiness. There are many kinds of certification and qualification barriers in aviation materials industry, such as industry supervision system, customer supplier certification system and so on. China's aviation materials industry started relatively late, affected by high-qualification certification barriers, the number of enterprises that have obtained air materials business qualifications in the country is relatively small, with only 178 as of 2021. The leading enterprises represented by companies that enter early and have rich customer supplier resources fully benefit from the high customer stickiness caused by high barriers in the industry, realizing the steady expansion of market share and competitive advantage.
At the right time for domestic replacement of aviation materials, self-research has opened the second growth curve. Under the strategic background of "Civil Aviation Power", the domestic substitution policy of the civil aviation industry chain with domestic large aircraft as the core continues to increase, and the domestic substitution of air materials has become an inevitable trend. The company takes its deep participation in domestic large aircraft projects as an opportunity to start the transformation of self-research and self-research of aircraft materials, and has continuously promoted the construction of self-research and self-production of aircraft materials in the past 10 years. In 2022, the proportion of revenue / gross profit of air materials research and development has reached 6.5pm 14.9% respectively. Looking back, with the localization bases of Huizhou, Jiaxing and Longnan aviation materials gradually completed and put into production, the company is expected to quickly turn the accumulated R & D patents and CAA certified self-research products into sales orders by virtue of the advantage of sales channels. We predict that the company's self-research revenue CAGR will reach 86.7% in 2023-2025.
Risk factors: changes in the business model of the industry; devaluation of RMB; concentration of suppliers and customers; construction of new projects is not as expected; qualification certification can not be continued; localization transformation leads to the loss of distribution suppliers; trade friction intensified.
Profit forecast, valuation and rating: the company complies with the strategy of "civil aviation power" and actively promotes the transformation of domestic self-research of aviation materials, the self-research business is expected to usher in rapid growth, and revenue structure and profitability are expected to be greatly optimized.
We estimate that the return net profit of the company in 2023 to 2025 will be 1.98 million yuan and 1.54 billion yuan respectively, and the corresponding EPS will be 1.22 million yuan and 1.54 billion yuan respectively. With reference to the PE valuation of 20,26 times during the historical open transaction between Longtou Weiske Aviation and BE Aviation, taking into account the development stage of China's aviation materials market, competition pattern, industrial chain structure and growth within the company, we give the company a certain valuation premium, while comprehensive DCF valuation results, give the company a target price of 54 yuan per share (corresponding to 35 times PE in 2024). Cover for the first time, giving a "buy" rating.