The core supplier of advanced metal materials for military and high-end civilian products, has continued to grow steadily for decades

The company's main products include high-performance alloy materials and products such as cast superalloys, deformed superalloys, special stainless steels, etc., mainly used in military and high-end civilian fields, including aero engines and gas turbines. It adapts to the market with “specialized, refined, and special” product characteristics, and explores the market with differentiated competition and technical services. Through years of accumulation and development, it has become one of the main manufacturers of domestic superalloy products. It is an important supplier of large-scale complex thin-walled superalloy structural parts for domestic aero engines, and special stainless steel seamless pipes. Major suppliers. In the ten years from 2013 to 2023, the company's operating income CAGR reached 18.67%, and net profit CAGR to mother reached 40%, maintaining continuous and steady growth.

At the end of the 14th Five-Year Plan, the popularity of aviation increased again, and the model switching and superposition inventory cycle entered the recovery stage to provide a high beta growth rate

2025 is the end year of the “14th Five-Year Plan”. Many new models in the aero engine industry chain are expected to enter the assembly+replacement stage. Driven by models, the industry chain is expected to return to the fast track of growth. At the same time, starting in 2023, the aviation development industry chain was affected by downstream OEMs taking the initiative to remove inventory, and the pick-up of goods by midstream and upstream companies is slowing down. However, it is expected that inventory removal will continue to be carried out in the future, and the original model will be picked up or gradually repaired. As a core supplier of castings and master alloys, the company is expected to fully benefit from the recovery in the aviation industry chain, and the production schedule of the aviation casting and master alloy business may continue to accelerate.

The Shenyang subsidiary is speeding up evidence collection, and Liming's core strategic suppliers are setting sail

Shenyang City proposes to push the city's aviation industry to achieve major breakthroughs in the fields of civil aviation and general aviation by 2025. The aviation industry's output value will exceed 120 billion yuan, strive to break through 200 billion yuan, cultivate no less than 10 enterprises with an output value of 1 billion yuan or more, no less than 50 industrial enterprises, no less than 3 listed companies, and the local support rate of China Airlines Shenfei and Shenyang Liming plants is not less than 50%. We believe that Shenyang Liming's production tasks are full and demand is strong, and the company's Shenyang subsidiary is expected to advance along with production line construction or usher in a period of rapid growth.

The industry chain continues to expand horizontally and vertically, and the share of stand-alone support value is expected to continue to increase

After the Shenyang Tunan layout and the company's continuous investment in R&D, the company has now formed a complete industrial chain layout from superalloy master alloys to structural parts such as chassis. At the same time, in addition to continuing to utilize the advantages of the traditional chassis business, the company has also added small to medium engine accessory products. This product has consumables and requires maintenance and replacement during engine overhauls. The back-end maintenance business has further enhanced the stickiness of the company's industrial chain and extended the business life cycle. The company's share of stand-alone support value may continue to increase. As the share of the back-end business gradually increases, the company's valuation is expected to be restructured or upgraded.

Profit forecast: We believe that as the boom in the aero engine industry chain recovers, the company's alpha advantage in back-end maintenance and the Shenyang subsidiary may be further highlighted, and it is expected to maintain a good growth trend. Due to changes in the pace of delivery in the aviation development industry chain, we lowered our profit forecast. We expect the company's net profit to be 0.343/0.442/0.681 billion yuan in 2024-2026 (previous values were 0.404/0.513/0.629 billion yuan, respectively), and the current stock price corresponding PE is 31/24/16 times, maintaining a “buy” rating.

Risk warning: risk of high customer concentration; risk of military market development; risk of technology leakage