Event

On October 31, Runbei Aeronautical Division released its third quarterly report for 2023. 2023Q1-Q3, the company achieved revenue of 604 million yuan, an increase of 49% over the same period last year, and a net profit of 78 million yuan, an increase of 30% over the same period last year.

Comment

1. The prosperity of civil aviation has rebounded, and the company's performance has grown rapidly. The company benefited from the rebound in civil aviation prosperity and the rapid growth of revenue and profits. 2023Q1-Q3, the company realized revenue of 604 million yuan, an increase of 49% over the same period last year, and a net profit of 78 million yuan, an increase of 30% over the same period last year. 2023Q3, the company realized revenue of 226 million yuan, an increase of 45% over the same period last year, an increase of 5% over the same period last year, and a net profit of 28 million yuan, an increase of 88% over the same period last year and 9% over the previous year.

2. Q3 gross profit margin stabilized and rebounded in a single quarter, and the company's financial expense rate decreased due to the increase in exchange earnings and deposit interest income. 2023Q1-Q3, the company's gross profit margin is 24.73%, which is 4.86% lower than the same period last year. 2023Q3 is lower than the same period last year. The company's gross profit margin is 26.22% lower than the same period last year. 2.00pcts is lower than the same period last year, and 2.88pcts is higher than the previous year. 2023Q1-Q3, the company's four-fee rate of 8.49%, decreased 5.23pcts compared with the same period last year, of which the financial expense rate decreased by 4.10pcts to-2.28% compared with the same period last year, mainly due to the increase in exchange earnings and the increase in interest income on time deposits.

3. The subsidiary Runhe plant has been completed, and the company's self-research business has entered the fast track of development. The company began to lay out the domestic aviation materials earlier, and the variety of products is becoming more and more abundant. By the end of H1 in 2023, 102 kinds of products independently developed by the company have passed various airworthiness certifications of the Civil Aviation Administration of China, which can be used to equivalent replace the imported aviation materials on various models of Boeing Co and Airbus aircraft operated in China. 2023H1, the company acquired Jiaxing light cloud, Jiaxing light cloud will be mainly responsible for aviation, aerospace advanced composite material research and development, production; at the end of 2023Q3, the subsidiary run and plant completed, the company's fixed assets of 73.29 million yuan, an increase of 2208% over the beginning of the year. We believe that the acquisition of Jiaxing Qingyun and the completion of the Runhe plant will greatly enhance the company's ability to develop its own aviation materials, and the company's self-research business will enter the fast track of development.

4. With the landing of a single order of 100 C919, the company is expected to fully benefit from the accelerated pace of production and delivery of large domestic aircraft. By the end of July 2023, the first C919 had served more than 15000 passengers. On August 4, 2023, the two domestic large passenger aircraft C919 received by China Eastern Airlines started "dual-aircraft commercial operation" for the first time, and the commercial operation of C919 moved steadily to scale.

In September 2023, China Eastern and Comac signed a "C919 aircraft Sale Agreement" to buy 100 C919 aircraft from Comac, and the C919 large airliner received the largest single order to date. Comac already has the capacity to mass produce C919 and will reach an annual production capacity of 30-50 aircraft in the next few years. With the accelerated pace of production and delivery of C919, the demand for aircraft materials in domestic large aircraft manufacturing is expected to increase significantly, and the company's air materials distribution business and self-made aviation materials business are expected to fully benefit.

5. We estimate that the return net profit of the company from 2023 to 2025 is 1.11,1.45 and 183 million yuan respectively, and the corresponding share price PE is 26,20 and 16 times respectively, maintaining the "overweight" rating.

Risk hint

The recovery of the domestic air transport industry is not as expected; the rise in procurement prices caused by exchange rate fluctuations and other factors; the development of self-produced business is not as expected; the development of domestic large aircraft is not as expected.