Avic Electromechanical Systems Co.Ltd(002013) (002013)
Key investment points:
Professional integration platform in aviation electromechanical field, with outstanding main business and strong strength. Since 2013, the company has successively carried out the asset integration of aviation electromechanical enterprises. It has gone through three major asset restructuring, which has changed the original decentralized pattern of aviation electromechanical field. At present, the company controls 12 and hosts 8 core electromechanical system companies, and is in a leading position in China’s aviation electromechanical field. The company’s main aviation industry is prominent. The revenue of aviation military products business has increased year by year from 2.445 billion yuan in 2013 to 9.014 billion yuan in 2020, and the proportion of the company’s main aviation industry has increased from 36% to 73.74%. The company mainly focuses on the field of military aviation electromechanical systems. Downstream customers basically cover all aviation main engine plants in China. At present, the company’s product pedigree covers aviation electromechanical systems such as aviation power system, hydraulic system, fuel system, environmental control system, high lift system, weapon and suspension launch system.
The heavy volume of military aircraft drives the company’s performance steadily upward. In the long run, civil aircraft are expected to relay heavy volume. Aviation industry is a strategic industry related to national security and the lifeblood of national economy. In terms of military aircraft, in the context of the Centennial goal of building the army and the modernization of the national defense army in 2035, the air force has historically stepped into the threshold of the strategic air force and proposed to build a weapons and equipment system with the fourth generation aircraft as the backbone and the third generation aircraft as the main body. Chinese military aircraft may usher in a large-scale stage. In terms of civil aircraft, the “14th five year plan” specifies that China will focus on promoting the demonstration operation of C919 large passenger aircraft and the seriation development of ARJ21 regional passenger aircraft. This year, the contract for the purchase of the first five C919 aircraft was officially signed and the first one will be delivered. According to COMAC’s prediction, 8725 aircraft will be delivered to the Chinese market by 2039, with a market value of about US $1.3 trillion. With the maturity and gradual delivery of domestic large aircraft, China’s civil aviation industry will usher in a high-speed development stage. The company is expected to fully enjoy the industrial dividend of the relay development of military aircraft and civil aircraft.
The company is expected to make efforts in the field of maintenance and spare parts. The company has coordinated the maintenance resources of its subsidiaries, acquired Nanjing Hangjian, created a one-stop aviation maintenance service mode, established a leading position in the field of aviation electromechanical system maintenance service support, and is expected to focus on the field of maintenance and spare parts in the future.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 1.394 billion yuan, 1.789 billion yuan and 2.146 billion yuan respectively, and EPS will be 0.36 yuan, 0.46 yuan and 0.55 yuan respectively, corresponding to 48, 37 and 31 times of the current share price. Considering that the company maintains a leading position in the aviation electromechanical field, and as a member of the aviation industry group, the company maintains in-depth cooperation with the main engine factory in the group, it is expected to directly benefit from the large volume of military aircraft. Give the company 38 ~ 44 times PE valuation in 2022, and the corresponding price range is 17.48 ~ 20.24 yuan. For the first time, the company is given a “prudent recommendation” rating.
Risk warning: R & D and production are not as expected; Market development is less than expected; Upstream price rise risk.
