Core views
According to the company's three-quarter report, the company achieved operating income of 2.195 billion yuan in the first three quarters, an increase of 20.52% over the previous year, and net profit of 503 million yuan, an increase of 25.02% over the previous year. The company is a leading aeronautical materials company. Its technology has reached the leading level in China, and it has strong R&D capabilities. It will fully benefit from the steady growth of military aviation aircraft and the localized replacement of military aero engines. In terms of civilian airliners, the company's titanium alloy castings, etc. have already entered the global supply chain. As the localization rate of the major domestic aircraft supply chain increases, the company's other product lines are actively expanding the civilian market.
occurrences
According to the company's three-quarter report, the company achieved operating income of 2.195 billion yuan in the first three quarters, an increase of 20.52% over the previous year, and net profit of 503 million yuan, an increase of 25.02% over the previous year. The third quarter alone achieved operating income of 876 million yuan, an increase of 23.11% over the previous year, and net profit of 207 million yuan, an increase of 18.14% over the previous year.
Brief review
The continuous increase in the company's sales revenue reflects good demand in the downstream aviation business, and the company maintains a strong competitive position in the industrial chain. In terms of profitability, the company's gross profit margin for the first three quarters was 34.52%, down 1.83 percentage points from the same period last year, and up 0.73 percentage points from the 2022 annual report. After the IPO, the company had abundant cash flow, increased financial returns, and increased net interest rates.
The controlling shareholder of the company is the Aviation Materials Institute, which is mainly engaged in basic research on the application of advanced aviation materials, material development and application technology research, and engineering technology research. The company has four divisions. The titanium alloy precision casting division and the high temperature alloy casting division mainly support military aero engines. Titanium alloy precision casting includes engine main bearing frames, etc. The products cover the vast majority of current military aero engine models in China and provide support for global engine manufacturers. High temperature alloy products cover all domestic batch production of high temperature alloy parent alloy products, and advanced grades that have been studied in advance and are being developed have been applied in mass production one after another.
The Rubber, Seals, and Transparent Parts Division mainly supports military aircraft fuselages, and the product performance has reached advanced international and leading domestic levels.
Profit forecasting
The company is a leading aeronautical materials company. Its technology has reached the leading level in China, and it has strong R&D capabilities. It will fully benefit from the steady growth of military aviation aircraft and the localized replacement of military aero engines. In terms of civilian airliners, the company's titanium alloy castings, etc. have already entered the global supply chain. As the localization rate of the major domestic aircraft supply chain increases, the company's other product lines are actively expanding the civilian market. With the commissioning of the fund-raising project, it is expected that the company's production capacity, production efficiency and yield will be increased, and the competitiveness of the company's products will be further enhanced, thus bringing inexhaustible impetus to the company's continued growth in performance. The company's net profit from 2023 to 2025 is estimated to be 5.71, 7.40 and 919 million yuan, respectively, with year-on-year increases of 25.05%, 29.65%, and 24.18%, respectively. The corresponding EPS for the year 23 to 25 was 1.27, 1.65, and 2.04 yuan respectively, corresponding to the current stock price PE of 48.63 times, 37.51 times, and 30.20 times, respectively. Recommended for the first time, it was given a “increase in holdings” rating.
Risk analysis
1. Delivery of military goods falls short of expectations: The military products industry is highly planned and is greatly affected by the international situation and policy environment. If the external environment changes, the pace of delivery may be greatly affected, causing the company's military revenue to fall short of expectations; 2. Military procurement prices may fall: under the military's requirements for low-cost procurement, military prices may face pressure to reduce prices; 4. The market share of new military models falls short of expectations: If the strength of the company's products falls short of expectations in the next generation of products, the market share of new products may decline;
5. Risk of military upgrades: Unmanned military aircraft may affect the growth expectations of some of the company's businesses.
If the company's revenue for the next three years falls short of expectations, net profit from the parent may not meet the predicted value. The relevant sensitivity analysis is as follows. The magnitude of change in revenue is the magnitude of change based on the 2023-2025 forecast in Table 1. Under extreme circumstances, if 2023-2025 revenue falls 25% compared to the forecast value, net profit for 2023-2025 will be 4.39, 5.75, and 709 million yuan.