occurrences

Recently, the company released its 2023 annual report, achieving operating income of 40.301 billion yuan, an increase of 7.01% over the previous year, and a net profit of 861 million yuan, an increase of 64.41% over the previous year.

reviews

1. Net profit to mother increased by 64.41% year-on-year. In 2023, the company achieved operating income of 40.301 billion yuan, a year-on-year increase of 7.01%, completed 94% of the operating plan, and achieved net profit of 861 million yuan, an increase of 64.41% over the previous year. The subsidiary Aviation Industry Shaanxi Fei achieved revenue of 10.887 billion yuan, a year-on-year decrease of 19.52%, and net profit of 315 million yuan, a year-on-year decrease of 19.64%. In 2024, the company plans to achieve revenue of 45.1 billion yuan, a year-on-year increase of 5% over the 2023 business plan.

2. Costs have been significantly optimized, and profitability has improved. In 2023, the company's gross profit margin was 6.87%, a slight year-on-year decline. In terms of cost ratio, the company's R&D expense ratio was 0.60%, management expense ratio was 2.26%, sales expense ratio was 1.18%, and the period cost rate decreased by 0.62 pcts to 3.41%. As the company's cost reduction and efficiency measures continued to advance, the cost ratio was significantly optimized. In 2023, the company's net sales margin was 2.14%, up 0.75pcts year-on-year, and profitability improved.

3. In terms of military products, the company is a major manufacturer of aviation products such as large and medium-sized military transport aircraft, bombers, and special aircraft in China. In terms of civilian products, the aircraft parts products developed by the company have covered all major domestic commercial large and medium-sized aircraft models. It has undertaken the development of key core components such as the fuselage and wings of the Xinzhou series aircraft, the C919 large passenger aircraft, the AG600 aircraft, and the ARJ21 aircraft. It is the largest supplier of airframe structures for these aircraft models. At the same time, the company actively participated in international cooperation and subcontract production, and undertook the manufacture of products such as Boeing 737 series aircraft tails, Boeing 747 aircraft assemblies, and Airbus A320/A321 series aircraft wings and airframes. In 2023, the Airbus A321 airframe system assembly project settled in Tianjin. It is an important achievement of the company's integration into the world aviation industry chain. It is an important project for the aviation industry, Airbus, and Tianjin in the field of international subcontracted aviation cooperation and in-depth industrial expansion. The project fully demonstrated the manufacturing and organizational management capabilities of the company's modern large-scale civil aircraft, and marked the company's civil aircraft fuselage parts subcontracting model towards system integration.

4. Purchases from related parties are expected to increase by 22.09% year on year in '24. In 2024, the company expects to purchase 24.785 billion yuan from related parties, an increase of 22.09% year-on-year over the estimated amount of 20.3 billion yuan in 2023. The amount of related transactions is expected to increase rapidly, indicating that the company's future production tasks will increase, and the company's performance is expected to maintain a relatively rapid growth rate.

5. Profit forecast and investment rating: We expect the company's net profit to be 10.37, 12.56, and 1,540 billion yuan in 2024-2026, up 20%, 21%, and 23% year-on-year. The current stock price corresponds to PE of 54, 45, and 37 times, covered for the first time, giving it an “gain” rating.

Risk warning

The risk of developing new models of equipment falling short of expectations; military orders falling short of expectations; military price cuts exceeding market expectations; market expansion falling short of expectations, etc.