Avic Xi’An Aircraft Industry Group Company Ltd(000768) (000768)
Event: 1) the company issued the announcement on the forecast of daily related party transactions in 2022. It is estimated that the total amount of related party transactions in 2022 will be 18.281 billion yuan, of which the total amount of goods purchased from related parties and services received is 17.448 billion yuan; 2) The company revised the articles of association and mentioned for the first time: “medium and long-term incentive and increase the incentive of core backbone”.
It is expected that the amount of related party transactions will further increase and the company’s performance is expected to continue to grow. The company expects that the total estimated amount of goods purchased and services received from related parties in 2022 will be RMB 17.448 billion, a year-on-year increase of 15.21% compared with the estimated amount of RMB 15.144 billion in 2021, and a year-on-year increase of 46.45% compared with the actual amount of RMB 11.914 billion as of December 6. Aviation industry is the controlling shareholder and actual controller of the company, and most of the company’s affiliated counterparties are subordinate units of aviation industry group. The related party transactions between the company and the subordinate units of AVIC group are conducive to giving full play to their professional advantages, forming complementarity and integrating resources. It is expected that the procurement scale related to production and operation of the company will continue to expand in 2022, and the revenue scale may continue to increase steadily.
Under the background of the implementation of the three-year action plan for the reform of state-owned enterprises, the company’s equity incentive plan may see the sun next year. 2022 is the end of the implementation of the three-year action plan for state-owned enterprise reform. “Improving the market-oriented operation mechanism and flexibly carrying out medium and long-term incentives in various ways” is an important content of the reform. At the same time, aviation industry group is the only pilot unit of military industry group belonging to commercial class II. It carries the first important task of establishing the authorized management system of state-owned capital with military industry characteristics and is the pioneer of state-owned enterprise reform. The revised articles of association of the company adds relevant functions and powers of the board of directors: “determine the medium and long-term incentive plan of the company” and adds Article 136: “the company establishes and implements the salary distribution system of key core talents with market competitive advantage, flexibly carries out various medium and long-term incentives and increases the incentive strength of core backbone”. In the context of state-owned enterprise reform, the company’s equity incentive plan is expected to accelerate the implementation, or clear the clouds in the year when the state-owned enterprise reform ends in 2022.
Profit forecast: it is estimated that from 2021 to 2023, the net profit attributable to the parent company will be RMB 996 million, RMB 1130 million and RMB 1498 million respectively, and the EPS will be RMB 0.36, RMB 0.41 and RMB 0.54 respectively, corresponding to 102 times, 90 times and 68 times of the current share price. Considering that under the background of China’s strategic air force, the loading of strategic air force equipment such as large transport aircraft will be accelerated, and the company’s products have the advantage of core card position, the company is given a PE valuation of 105 ~ 120 times in 2022, with the corresponding price range of 43.05 ~ 49.20 yuan, maintaining the “recommended” rating of the company.
Risk warning: production delivery is less than expected, downstream demand is less than expected, and the epidemic situation is repeated.
