The future market growth space of aviation forging and casting is expected to exceed 100 billion, and the high growth of the industry is expected to continue
The increment of China’s military aircraft in the next 10 years, the domestic replacement of engines and the dual engine model of engines are expected to lead the scale of forging and casting market to exceed 100 billion: there is a large gap in the number and structure of aircraft between China and the United States. Compared with overseas enterprises, China’s aerospace forging and casting field is still in the early stage of development, and the industry has a large growth space. The “14th five year plan” is only the starting point for the rapid development of the industry, The rapid growth trend of the industry is expected to continue.
Generally speaking, foreign forging and casting related companies gradually undertake more functions and tasks originally undertaken by the main engine plant through upstream and downstream mergers and acquisitions, and the performance scale is growing rapidly (the revenue level of key companies is US $10-20 billion, of which the revenue level of precision forging and casting is as high as US $7.3 billion); In contrast, at present, China’s forging and casting related companies mainly provide forging and casting products (the largest revenue of Avic Heavy Machinery Co.Ltd(600765) is less than US $1.5 billion), and there is still much room for growth compared with the business scale.
During the 14th Five Year Plan period, the shortage of supply is expected to continue, and the improvement of production capacity will accelerate the release of the company’s performance
Military enterprises have relatively strong planning, and the company’s inventory, prepayment and contract liability indicators have certain guidance for the marginal growth of future performance: Generally speaking, in the Q3 reporting period of 2021, the storage goods, prepayment and contract liabilities increased by 12%, 25% and 23% respectively. On the whole, the forging and casting enterprises show a trend of continuous increase in orders in the future.
In the future, the proportion of new aviation models will gradually increase and the overall demand of the downstream will surge. As a core accessory, forging and casting products will increase both in volume and price due to the requirements of higher quality, better performance and larger specifications. Take related companies Avic Heavy Machinery Co.Ltd(600765) , Xi’An Triangle Defense Co.Ltd(300775) for example, there are announcements of capacity expansion projects during the 14th Five Year Plan period. The main time period is 2021-2023. With the accelerated release of capacity, the performance of related companies is expected to improve marginally.
Recommended object:
Aviation forging and casting targets: Avic Heavy Machinery Co.Ltd(600765) , Xi’An Triangle Defense Co.Ltd(300775) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) ;
Risk tips:
Risk of rising raw material prices; Global epidemic impact and uncertainty of foreign policy environment; Geopolitical related risks
