Avic Shenyang Aircraft Company Limited(600760) (600760)
Key investment points:
The core target of fighter is to break through the bottleneck of profitability. The company is the core target of Chinese fighter, and the card position advantage is very obvious. In 2021, the company reported that the net interest rate of non parent company deduction exceeded 5% for the first time, reaching 5.56% and 5.53% in the third quarter; The company is the first main engine plant to achieve a net interest rate of more than 5%. After the company’s revenue of 10 billion is amplified, the profit elasticity is very considerable. The contract liabilities of the company exceed 30 billion yuan, and the future performance growth is highly predictable.
The high prosperity of the industry combined with the increase in the number of fighters and the demand for replacement drive the company’s performance to continue to rise. The “14th five year plan” proposes to “achieve the Centennial goal of building the army by 2027”. Recently, “accelerating the modernization of national defense and the army” has been emphasized many times, and the national defense and military industry has ushered in a stage of rapid development. Aviation equipment is the focus of national defense equipment development, in which fighter is the top priority. In the face of the gap with the powerful air force, China’s fighter field will be boosted by the quality improvement of the replacement of old and new equipment and the total improvement of large-scale multiple aircraft types. The company is expected to usher in rapid performance growth under the high boom and strong demand.
Shenfei under the reform has opened a long-term growth space. 1. The company improves the performance appraisal system to stimulate the internal power, and the company’s value creation ability and process efficiency are expected to be improved; 2. Balance the main theme of production and help the company reduce costs and increase efficiency. In the first half of the year, Shenyang Airlines realized “more than half the time and more than half the task”, and completed the annual task 16 days in advance on December 15; 3. After the reform of pricing mechanism, the products will be determined according to “pricing cost + 5% target price + incentive and restraint profit”, and the new pricing of the company’s new model is expected to open up the future profit space; 4. The company implements ten-year equity incentive, which is deeply bound with the management and core employees to lay the foundation for the medium and long-term stable development of the company. In terms of products, the company’s j-16 and j-16d have entered the batch production stage with strong demand. In the future, the fc-31 shipborne version is expected to replace the J-15 relay. Under the reform, Shenfei has the conditions for stable growth of performance and continuous release of profits. The long-term growth space in the future has been opened. It is recommended to continue to pay attention.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 2.05 billion yuan, 2.69 billion yuan and 3.41 billion yuan respectively; EPS is 1.05 yuan, 1.37 yuan and 1.74 yuan, corresponding to PE multiples of 65, 49 and 39 times of the current stock price. Considering the acceleration of national defense army construction during the 14th Five Year Plan period, fighter, as the front-line key equipment of the game between the two sides, will be the key direction of China’s national defense construction, and will develop at a high speed under the guidance of strong demand. At the same time, the company, as the only target of fighter aircraft listed in a shares, is expected to fully share the development dividends of the industry. Referring to the aviation equipment sector, the average PE valuation of main engine plants Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) in 2022 is 66 times, and the company is given a PE valuation of 58 ~ 68 times in 2022, with the corresponding price range of 79.46 ~ 93.16 yuan. The company’s rating is raised and the company is given a “recommended” rating.
Risk warning: product R & D and delivery are not as expected; Downstream demand is lower than expected; The epidemic situation is repeated.
