Main points of investment
Event: the company released its third-quarter report that its operating income in the first three quarters of 2018 was 901 million yuan, an increase of 29.96% over the same period last year; the net profit attributed to the parent company was 10 million yuan, an increase of 2737.39% over the same period last year.
The company realizes the profit reversal, the follow-up performance can exceed the expectation. From 2017 to the middle of this year, the company's performance continued to decline. The third quarterly report on October 29 announced that the operating income in the first three quarters of 2018 was 901 million yuan, an increase of 29.96 percent over the same period last year. The net profit attributed to the parent company was 10 million yuan, an increase of 2737.39 percent over the same period last year. As soon as the company changed its business downturn, it realized a reversal of profits. In the balance sheet, bills and accounts receivable were 836 million yuan, and inventory was 282 million yuan, an increase of 52.36% and 82.32% respectively over the end of 2017, mainly due to the increase brought about by the acquisition of subsidiaries. During the reporting period, the wholly-owned subsidiary won the bid "Internet +" project, the winning amount was 100 million 3.55 yuan, and the regional marketing network was highly cooperative. The order situation of the company remains good, and the follow-up performance is expected.
After many capital operations, the company is currently focusing on the three main businesses of security, medical care and electronic information. At present, the company's products are involved in safe city, security science and technology construction, emergency anti-terrorism, land border defense, public security and police informatization, production safety supervision, medical equipment, medical information, operating room engineering, special computers, infrared optoelectronic products and other business areas. In order to further concentrate resources on the development of the main business, increase the proportion of independent technology and products, and adjust the non-core business, on April 27, the company considered the transfer of all shares held by Beijing Beike Digital Medical Technology Co., Ltd. through public listing. In 2018, the income concentration of the company's three main businesses continued to remain above 99%. We believe that in 2018, the company will continue to focus on the three main industries to achieve stable growth in the overall performance of the sector.
Extension mergers and acquisitions to expand product layout, cooperate with the main business to improve profitability. In terms of capital operation, give full play to the role of capital operation platform of listed companies, combined with the company's development strategy, around the main business industry chain to carry out M & A work. During the reporting period, the company raised 127 million yuan through the issuance of additional A shares to acquire 51% of the shares of Burke Xineng (now known as "Aerospace Burke") and Jingyi Planning (now known as "Aerospace Jingyi"). Now it has completed the assets delivery and industrial and commercial change of Aerospace Burke and Aerospace Jingyi. Aerospace Burke, a subsidiary of Aerospace Changfeng Holdings, recently signed a lithium battery equipment procurement contract with China Tower Corporation, with a total price of 205 million. Through this reorganization, Aerospace Burke's power series products and Aerospace Jingyi police geographic information system products and services will supplement the shortcomings of Aerospace Changfeng in the field of security. In addition, it will promote the transformation of the company from a system integrator to a product provider and operation and maintenance service provider, and optimize its business model, so as to improve the company's profitability and core competitiveness.
The overall asset securitization rate of Aerospace Science and Industry Group is low, and as the only listed company controlled by the second Institute of Aerospace Science and Industry, the value of the platform is prominent. The controlling shareholder of the company is the second Academy of Aerospace Science and Industry. According to the data reported in the third quarter of 2018, the controlling proportion of the second Academy of Aerospace Science and Technology is 34.99%. The convening of the first meeting of the military-civilian Integration and Development Committee and the restructuring of the first batch of 41 military scientific research institutes launched by the State Administration of Science, Technology and Industry for National Defense have demonstrated the determination of the upper levels to reform the military industry, and the restructuring of the institutions and the integration of the military and the people have been accelerated. Among the major military industrial groups, the overall asset securitization rate of the Aerospace Science and Industry Group is currently at a low level, less than 25%. Compared with China's electronics, AVIC, weapons and other military industrial groups, there is still much room for improvement. In this context, we believe that as the only listed company controlled by the second Institute of Aerospace Science and Industry, the value of the platform is prominent and is expected to benefit.
Investment suggestion: we expect the company to achieve a net profit of 0.11,0.12 and 0. 5% respectively from 2018 to 2020.
1.3 billion yuan, corresponding to earnings per share of 0.03,0.03,0.04 yuan per share respectively. On October 26th, the company closed at 9.06yuan, corresponding to 2018 dynamic PE about 302times, slightly higher than the comparable company valuation. However, considering the platform background of the company as the only listed company controlled by the second Institute of Aerospace Science, Technology and Industry, the company will be given an overweight rating.
Risk hints: lower-than-expected R & D progress, national policy risk, intensified market competition, high valuation risk.