Event

On January 16, the company issued an annual performance forecast for 2019, which is expected to achieve a net profit of 72.9376 million yuan to 88.0282 million yuan, an increase of 45% to 75% over the same period last year.

Brief comment

The annual report predicts a substantial increase in performance, and the delivery of new models is smooth.

On January 16, the company issued an annual performance forecast for 2019, which is expected to achieve a net profit of 72.9376 million yuan to 88.0282 million yuan, an increase of 45% to 75% over the same period last year. It is estimated that the impact of non-recurrent profit and loss on net profit is about 16.8259 million yuan, and the net profit after deducting non-recurrent profit is 56.1117 million yuan to 71.2023 million yuan, an increase of 60% to 103% over the same period last year.

During the reporting period, the company's operating income and net profit increased significantly over the same period last year, new customer orders for equipment development and support business gradually landed, new model products were delivered smoothly, while Estonia Magnetic was in good condition, which produced synergy with the company's existing aviation maintenance business. At the same time, the company's sales rebate is good, and the operating cash flow has improved significantly.

Committed to airborne equipment and aviation maintenance, automatic testing products contribute to the new performance source company dedicated to automatic testing for 20 years, has gradually become China's current delivery of the largest number and use of bases, the highest level of protection, the greatest business potential aviation maintenance product development enterprises. In 2019, the company made many breakthroughs in airborne product development, integrated data acquisition system and integrity use monitoring system began mass production according to plan, UAV flight parameter recording system and wide-body helicopter HUMS system completed verification, and has carried out PHM, CMS, EMU and pilot construction big data application business and other research and mass production.

The demand for traditional airborne equipment is growing steadily. The value of airborne equipment has accounted for more than 40% of the new foreign military aircraft, and more than 30% of large airliners. Civil aviation: according to the statistics of the Ministry of Industry and Information Technology, the space for civil aviation airborne equipment will be about 540 billion in the next 10 years; in military aviation, fixed-wing aircraft and helicopters will be superimposed, creating 600 billion market space for military airborne equipment.

At present, China's aviation equipment is in the stage of rapid construction, and the Air Force has a strong demand for general-purpose helicopters for third-and-a-half and fourth-generation fighters and the Army Aviation Corps. As a supplier of airborne equipment and aviation maintenance products, the company will fully benefit.

Layout integration of global civil aviation maintenance, MMRO operating performance is good

Deeply ploughing the field of civil aircraft maintenance and actively expanding overseas markets. In 2018, the company completed the acquisition of 100% stake in Estonia Magnetic aircraft maintenance Co., Ltd. (MMRO), started the process of civil aircraft maintenance and guarantee of the whole industry chain, and will fully integrate the global civil aviation maintenance business in the future. After the completion of the acquisition, MMRO is operating well and has a synergistic effect with the company's existing business, significantly thickening the performance of the company's civil aircraft maintenance sector.

The company acquired DMH B.V. Through its wholly owned subsidiary MMRO in Estonia. The company can achieve complementary business advantages with MMRO. After the completion of the acquisition, the company has most of the narrow-body / wide-body aircraft route maintenance capabilities. The passenger volume of civil aviation international routes began to pick up from Q4 in 2017 to the beginning of 2018, and the international passenger traffic volume of civil aviation has been + 14.80% since 2018 compared with the same period last year. Through this acquisition, the company will strengthen its business layout in Europe and Africa, which will not only complement MMRO's narrow-body aircraft maintenance business, but will give full play to its synergy with domestic route maintenance business in the future with the improvement of outbound tourism and international passenger flow, and the early layout of the company's civil aviation maintenance sector may usher in the harvest period.

Profit forecast and investment rating: the military and civilian business goes hand in hand, the global layout of civil aviation maintenance, the rapid development of the airborne equipment business of the buy rating company, the steady growth of aviation maintenance and services is expected, and the layout of the whole industry chain of aviation maintenance is initially completed. the operating condition of the acquisition target is good, and the business space is broader. It is estimated that the company's net profit from 2019 to 2021 is 83 million yuan, 111 million yuan and 143 million yuan respectively, an increase of 65.83%, 32.57% and 28.98% respectively over the same period last year. The corresponding EPS for 19-21 years is 0.35,0.46 and 0.59 yuan respectively, and the share price PE before the corresponding period is 42,32 and 25 times respectively, maintaining the buy rating.