[Core view] Core supplier of aeronautical materials, industry-research collaboration helps the military and civilian circuit be first-class. The company has four major business divisions, covering key metallic and non-metallic aviation materials — titanium alloys, high temperature alloy master alloys, rubber and seals, and transparent parts. In various material segments, the company's technology research and development is leading domestically and at an advanced international level. We believe that the increase in civil and military aviation development will help boost the company's performance. The Zhenjiang Company's production capacity injection is expected to further boost operating standards. It is itself the only comprehensive listed company for new aviation materials in the Aviation Development Group. The future prospects are promising. We are giving the company 44 times PE in 24 years.
Civil aviation is picking up, military demand is speeding up, and increasing aviation development is helping the basic market. There is still a large quantitative and generational gap between China's aviation equipment and the United States. It is time to speed up shift gears; aviation components started late and the growth rate is high, and the future will continue to expand around military aircraft, international civil aviation, etc. We expect to increase the military aircraft structure market by 2024 by 26.33 billion yuan and the military development market by 114.33 billion yuan. International civil aviation continues to pick up. In the next 20 years, China's civil aviation market will average an average annual size of 514.85 billion yuan.
Backed by the Aviation Materials Research Institute, it has strong R&D industrialization capabilities. It is the only listing platform under the Aviation Materials Institute. The technology all comes from the Beijing Aviation Materials Institute, and it has a complete and strong R&D system and industrialization capabilities. The company's four major businesses cover most domestic military material models under development and production. Domestically, it is deeply tied to China Aviation Development and Aviation Industry Group. Internationally, it has established long-term cooperative relationships with GE Aviation, Safran, Airbus, etc., and has strong customer stickiness.
Raising capital to expand production in four major businesses, the Zhenjiang Company is about to inject production capacity. The company's fund-raising projects cover four major businesses and are mainly used to expand production capacity and R&D upgrades to meet the growing demand downstream. Furthermore, the equity injection of Zhenjiang Company is clear. In the future, it is expected to increase the production capacity of titanium alloy castings and superalloys, reduce costs and increase efficiency, and promote the company's performance development.
Profit forecast: We forecast that the company will achieve revenue of 333/42.15/5.396 billion yuan in 2024-2026, up 18.9%/26.5%/28.0% year on year; net profit to mother will be 7.18/9.17/ 1,190 billion yuan, respectively, up 24.7%/27.7%/29.7% year on year. First coverage, giving a “buy” rating.
Risk warning: risk of raw material price fluctuations; risk of R&D falling short of expectations; risk of downstream demand fluctuations; risk of asset injection falling short of expectations.