Main points of investment
The company's business is improving: aviation complete aircraft business, the announcement of subsidiary Zhi Zhi shares on July 1 revealed that the net profit attributed to shareholders of listed companies is expected to be 358.38 million yuan to 418.11 million yuan from January to June 2021, an increase of 59.73 million yuan to 119.46 million yuan, an increase of 20% to 40% over the same period last year. The main reason for the pre-increase in performance is that the sales volume of aviation products has a large increase compared with the same period last year. Aviation parts business, subsidiary AVIC Optoelectronics disclosed a non-public offering plan on July 10, raising funds of no more than 3.4 billion yuan to invest in AVIC (Guangdong) South China Base and AVIC basic Devices Industrial Park project (Phase I). The investment in South China base is one of the regions with the best development prospects of domestic communications and new energy vehicle business in the Pearl River Delta region, and the company has less production capacity layout in this region. It is not conducive to regional business development. After the completion of the investment, on the one hand, it will help to reduce the company's production and transportation costs in the Pearl River Delta region, improve the company's profit level, on the other hand, it will also help to improve the company's response speed to local customers. AVIC Optoelectronic basic Devices Industry Park project will continue to enhance the company's defense special connector competitiveness.
The national defense and military industry is in a high boom: the leading party group of the aviation industry held an economic operation conference in the first half of 2021, and the aviation industry achieved "more than half of the time and more than half of the income" for the first half of the year, of which the military business achieved "more than half of the time and more than half of delivery" for the first time, and the benefit index not only far exceeded the progress of sequence, but also significantly ahead of the growth rate of income, and the balanced level of profitability and profit creation was further improved. AVIC achieved more than half of the double for the first time, reflecting the high prosperity of the industry and the particularity of this round of military boom-the high prosperity of the industry has been reflected in the company's performance.
In the medium to long term, the fundamentals of the military industry continue to improve: in our annual strategy report, we demonstrated the inevitability of the military industry boom from the perspective of the evolution of military strategy. The evolution of the world military trend has brought about changes in China's naval strategy, thus promoting the sustained high prosperity of naval equipment. The general trend of the world military requires information-based and platform operations, and the demand for missiles is growing explosively. The reasonable structure of military power has brought about a large amount of compensated investment by our air force, especially the military aircraft industry chain ushered in a high boom. Military-civilian integration under the military-civilian relationship is a national strategy, which provides an once-in-a-lifetime strategic opportunity for high-quality private enterprises.
AVIC represents the high-quality assets of the aviation industry chain: 1) the whole aircraft are mainly helicopters and trainers. The helicopter has shown a pedigree development, forming a good pattern of "one machine, multi-type, series development". 2) Aeronautical accessories are mainly avionics system and high-end connectors. The company is the only target of aviation companies listed in Hong Kong shares, and it is scarce.
Combined with the prosperity of the national defense industry and the company as the most important platform company in AVIC, it will fully benefit from the development of the industry and group companies.
Investment suggestion: the revenue of the maintenance company from 2021 to 2023 is 606.35 yuan, 718.53 yuan and 84.993 billion yuan, and the net profit is 24.45,29.50 and 3.436 billion yuan respectively, and the corresponding EPS is 0.32,0.38,0.45 yuan. Maintain the "buy-A" rating.
Risk tips: 1, the risk of market development of civilian products. As there are many competitors in the civilian products market, and there are some differences between the business model and the military industry, there is a risk of market development. 2. the risk of new product research and development. The company is a high-tech enterprise with high technology content, and its subsidiaries are working on a large number of products, and there is a risk that the progress of research and development is lower than expected and the time to market of new products is lower than expected. 3. Secondary market risk. Although the company is a sound high-tech leading enterprise, but β is larger, the fluctuation of the secondary market will bring certain risks.