Incident: On March 30, 2024, China Airlines Shen Fei released its 2023 annual report. During the reporting period, the company's consolidated statements achieved operating income of 46.247.7786 million yuan, up 11.18% year on year; net profit of 300,91937 million yuan, up 30.11% year on year; net profit attributable to owners of the parent company was 300,7151 million yuan, up 30.47% year on year; basic earnings per share were 1.09 yuan/share, up 29.76% year on year.
Actively carry out applied research and promote breakthroughs in core technology. In terms of scientific and technological research and development, the company actively carries out basic application research and cutting-edge technology research, and continues to advance breakthroughs in core key technologies. It has a national enterprise technology center, engineering application center, titanium alloy processing provincial laboratory in the fields of digital manufacturing technology application, composite material application, aircraft design technology, aviation technology and equipment engineering, and has rapid trial production capabilities for aviation defense equipment products with the “Shenyang New Aircraft Rapid Trial Production Center” as the core. It has obtained many national invention and utility model patents, and has been recognized as a national high-tech enterprise many times Science and Technology Progress Award, National Defense Science and Technology Progress Award.
Manufacturing capacity has been steadily improved, and the level of balanced production has reached a new level. The company has established a manufacturing system dominated by digital technology. It has leading technical advantages in CNC machining of large-scale structural parts, application of simulation technology, composite material processing, sheet metal and conduit manufacturing, aircraft system manufacturing, and various special processes, and has realized the cross-generational development of aircraft manufacturing. In recent years, the company has actively promoted the application of advanced technology and intelligent manufacturing production models around model development requirements, carried out in-depth technical research on precise parts manufacturing and assembly system integration, and vigorously promoted the development of parts manufacturing and assembly integration to automation and intelligence. It has made substantial progress in the application of digital intelligent workshops, flexible assembly lines, and key digital and intelligent manufacturing technologies, and has reached a new level of balanced production.
Test flight capabilities have been enhanced, and the maintenance and guarantee industry chain has been extended vertically. In terms of test flights, the company has built an airborne finished product test system, with a comprehensive integrated test environment, the ability to perform individual pre-installation tests of finished products, fault location, problem handling, and test flight, and independently developed a telemetry real-time monitoring platform, fully automatic near-field flight optical tracking, real-time aircraft attitude recognition and dynamic measurement, 3D simulation landing trajectory deviation warning, test flight data processing, and meteorological intelligence information systems for special debugging and test flights. In terms of maintenance and service support, the company has rich aviation defense equipment maintenance experience and a solid maintenance foundation, involving aviation defense equipment, engine, aircraft parts repair, and spare parts manufacturing, etc., to achieve a vertical extension of the industrial chain and continue to build a maintenance system for the entire life cycle of aviation defense equipment.
Investment proposal: AVIC Shenfei Co., Ltd. (abbreviation: AVIC Shenfei) is a joint stock company whose main business is aviation product manufacturing. The place of registration is located on the Jiaodong Peninsula, the ancient city of Wendeng, and its office is located in Shenyang, the center of national equipment. 2017, Aviation Industry Shenyang Aircraft Industry (Group) Co., Ltd. (abbreviation:
(Aviation Industry Shen Fei) 100% of the shares were injected into China Airlines Shen Fei, becoming the only wholly-owned subsidiary of China Airlines Shen Fei, and achieved the overall listing of core military assets, and is known as “the first Chinese fighter.” According to model estimates, the company expects net profit to be 39.35/49.83/6.219 billion yuan from 2024 to 2026, EPS is 1.43/1.81/2.26, respectively, and the corresponding P/E is 25.5/20.1/16.1 times, respectively. Give it an “gain” rating.
Risk warning: industrial policy risk; risk of investment project benefits falling short of expectations; risk of high inventory size; macroeconomic instability; changes in the international political landscape.