The company released its annual report for 2020: the company achieved revenue of 819 million yuan, an increase of 19.06% over the same period last year; net profit of 192 million yuan, an increase of 7.52% over the same period last year; net profit of 168 million yuan, up 9.88% over the same period last year; basic earnings per share of 0.19 yuan per share, an increase of 5.56% over the same period last year; and a weighted average return on net assets of 8.45%, an increase of 0.01pct over the same period last year.

During the reporting period, the company's powder equipment and its supporting business maintained a steady rise, with revenue of 618 million yuan, an increase of 9.36% over the same period last year. Due to a sharp increase in entrusted processing orders, aerospace parts manufacturing business continued to grow rapidly, achieving a business income of 201 million yuan, an increase of 63.93% over the same period last year.

2021Q1, the company achieved operating income of 252 million yuan, an increase of 99.78% over the same period last year, mainly due to an increase of 108 million yuan in operating income from aerospace parts manufacturing business, and a net profit of 79 million yuan, an increase of 137.35% over the same period last year. The company issued a forecast of operating results: from January to June 2021, it is expected to achieve a net profit of 1.18-152 million yuan, an increase of 70% over the same period last year. The increase in the company's performance from January to June in 2021 is mainly due to an increase in the company's aerospace parts manufacturing business orders, resulting in an increase in revenue. In 2020, Dekun Airlines, a wholly owned subsidiary of the company, achieved revenue of 201 million yuan, an increase of 63.77% over the same period last year; net profit of 63.85 million yuan (excluding equity incentive fees of 17.62 million yuan), an increase of 97.86% over the same period last year; and net interest rate of 31.81%, an increase of 5.48pct over the same period last year. Excluding the contribution of Dekun Airlines, the company achieved revenue of 618 million yuan and net profit of 128 million yuan in 2020, an increase of 9.36% and a decrease of 12.44% respectively over the same period last year.

The company improved the long-term incentive mechanism through equity incentives. During the reporting period, the company awarded 15.96 million restricted shares (accounting for 1.57% of the company's total share capital) to the incentive targets at a price of 2.38 yuan per share, and the equity incentive plan involved 65 people. all are the company's wholly-owned subsidiary Dekun aviation managers and core backbone.

Dekun Aviation, a wholly owned subsidiary of the company, is an advantageous integrated service provider with comprehensive professional coverage and a wide range of service items in the aerospace mainframe factory. The products are used in Boeing, Airbus, IAI, Comac and other civil aircraft, various types of military aircraft and carrier rockets. The main business covers tooling mold design and manufacturing, precision machining of CNC parts, sheet metal parts manufacturing and assembly of parts. The industrial scale and engineering technical capability of Dekun aviation sheet metal business occupy a leading position in civil-military integration enterprises, and the assembly business involves the metal and composite sections and components of several types of military aircraft, drones and carrier rockets. With the increasing demand for a new generation of military aircraft and domestic large aircraft, the pace of development of Dekun aviation business is expected to significantly exceed expectations. We expect the company's 2021-2023 net profit to be 311 plus 572 million yuan per share, respectively, and the EPS is 0.30 yuan per share, 0.55 yuan per share, corresponding to the closing price of PE on May 6, which is times that of 30-16-12. For the first time, the company was given a "prudent overweight" rating.

Risk hint: the growth rate of downstream orders slows down; the price of spare parts processing goes down.