Event: the company released the "Annual report 2020" and "first quarter report 2021", with revenue of 819 million yuan in 20 years, + 19.06% year-on-year, and net profit of 192 million yuan. Q1 realized revenue of 252 million yuan, + 99.78%, and net profit of 79 million yuan, + 137.35% in 21 years.

Comments:

1. The net cash flow of Q1 operation in 21 years is + 205.43% compared with the same period last year, and the performance of roll press + aviation manufacturing two-wheel drive is growing rapidly. Lijun shares achieved revenue of 819 million yuan in 20 years, + 19.06% year on year, 149 million yuan (+ 27.92%) net operating cash flow in 20 years, and 79 million (+ 205.43%) net operating cash flow in 21Q1. The first quarter is usually the off-season for the delivery and settlement of military enterprises. On the basis of a significant increase in cash flow over the past 20 years, the 21Q1 cash flow has increased exponentially compared with the same period last year, highlighting the company's good financial situation, full downstream demand, accelerated settlement and settlement, and healthy cash flow. The 20-year R & D expenditure of 29.2838 million yuan (+ 88.04%) and 21Q1 R & D expenditure of 6.3753 million yuan (+ 132.31%) is mainly due to the company's increased R & D efforts and the increase of R & D projects. The number of R & D personnel reached 94 (+ 80.77%) in 20 years, and the gross profit margin was 43.12% (- 1.20%), which remained stable as a whole. 21Q1 is under construction at 91.227 million yuan (+ 53.07%), mainly due to the increase in investment in the aerospace equipment intelligent production line project, indicating that Dekun Airlines, a subsidiary, is actively expanding production and capacity, making sufficient preparations for further release of performance potential. The company strengthens the internal operation management, optimizes the allocation of production resources, strictly reduces costs and increases efficiency, releases scale effects, consolidates the company's dual leading position in roller press / aerospace parts manufacturing, and ensures sustained and high-speed development through double-wheel drive.

2. Benefiting from the strong demand of the downstream mainframe factory, the aviation manufacturing business is developing rapidly. Dekun Airlines, a subsidiary, is a leading supplier of comprehensive spare parts manufacturing services in the domestic aerospace industry, covering tooling and mold design and manufacturing, precision machining of CNC parts, sheet metal parts manufacturing and component assembly. It has the overall delivery capacity of components of the Ministry of Aeronautics and Astronautics and the machining capacity of the whole industry chain except compound materials.

In 2020, the company's aviation parts and tooling design and manufacturing business income of 200 million yuan, year-on-year + 63.93% position 2021Q1 revenue of 252 million yuan, + 99.78% year-on-year, home net profit of 79 million yuan, + 137.35%, reflecting that Dekun Airlines highly benefited from the strong demand for orders from downstream mainframe factory groups, as well as the company's core position in the supplier list with the advantage of taking orders. The company's aviation manufacturing business continues to develop, the order on hand is full, the capacity is running at full capacity, and the amount of revenue shows explosive growth, significantly thickening the company's performance. In the future, the downstream mainframe factory in the 14th five-year Plan will continue to expand substantially, superimposing the expansion of demand for new models, the upgrading of old models, the prosperity of export business, and the continued expansion and strength of drones, the company's aerospace parts business is expected to continue to contribute to the high profit growth of listed companies and drive the company's performance to take off.

3. Dekun Airlines' production capacity is about to be released, the layout is perfect and the technology is mature, and the first-mover advantage is obvious. Dekun aviation manufacturing industry chain layout is perfect, tooling design and manufacturing qualifications are complete, sheet metal processing industry is leading, CNC precision machining is complete to undertake military aircraft, civil aircraft, drones, aerospace equipment and other parts business, departmental assembly docking a number of mainframe factories. In the face of the rapid expansion of the military aircraft civil aviation market, in 2020, the company actively increased capital to Dekun Aviation to expand its production capacity, investing 600 million yuan to build a new intelligent manufacturing production line for aerospace equipment. At present, the main project has been completed and has entered the stage of equipment installation and commissioning. After the completion of the project, the information and intelligent level of the company's aerospace parts manufacturing will be significantly improved, the expansion of production scale is fully matched with the growth of orders, and the first-mover advantage will help the company to undertake more business orders.

4. Cover for the first time and give Lijun a buy rating. (1) the quality of the company is good: steady progress in the double main industry + high economic development of the military industry + a substantial increase in production capacity; (2) the subsidiary Decun Aviation has complete qualifications, complete chain and overall delivery capacity of spare parts, to undertake the processing and manufacturing business of multi-type aircraft and equipment at home and abroad. (3) the military aircraft market continues to benefit from the downstream volume, the domestic replacement and independent research and development of large aircraft in the civil aircraft market is just around the corner, and the future business demand growth has high certainty; (4) the company pays attention to sustainable development, giving consideration to new market expansion and existing market maintenance, with equal emphasis on capacity improvement and production efficiency, and sufficient driving force for long-term development. The net profit of 2021-2023 is expected to be 368, 582, 819 million, PE27/17/12 times, with a buy rating.

Risk hint: the company's development is not as expected, the order is not as expected, and the company's R & D investment is not as expected.