\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 765 Avic Heavy Machinery Co.Ltd(600765) )
Key investment points:
Avic Heavy Machinery Co.Ltd(600765) 3 on the evening of March 14, the annual performance report for 2021 was released: the operating revenue in 2021 was about 8.79 billion yuan, a year-on-year increase of 31.23%; The net profit attributable to the shareholders of the listed company was about 891 million yuan, a year-on-year increase of 159.05%; The basic earnings per share was 0.89 yuan, a year-on-year increase of 140.54%.
The performance exceeded expectations, and the rapid growth of military forgings has become the core performance growth point
In 2021, the operating revenue was about 8.79 billion yuan, with a year-on-year increase of 31.23%; The net profit attributable to the shareholders of the listed company was about 891 million yuan, a year-on-year increase of 159.05%, deducting 724 million yuan of non parent net profit, a year-on-year increase of 166.60%. The performance increased rapidly in 2021, exceeding expectations.
In 2021, the operating revenue of Aerospace Forgings reached 6.699 billion yuan, a year-on-year increase of 34.49%; Radiator achieved an operating revenue of 1.143 billion yuan, an increase of 35.63% year-on-year,; The operating revenue of hydraulic products was 905 million yuan, a year-on-year increase of 10.79%.
The operating revenue of military forgings has increased significantly. The revenue of military forgings accounts for 74.9% of the operating revenue and 76.48% of the company’s gross profit. It is the core business of the company. In 2021, it contributed 75.1% of the company’s gross profit growth.
In 2021, 6915395 tons of aviation forgings were sold, with a year-on-year increase of – 11.49%; 586700 sets of radiators were sold, with a year-on-year increase of 75.79%; 83014 sets of hydraulic products were sold, basically the same as last year. In terms of volume, the sales volume of aviation forgings decreased slightly in 2021, but the operating revenue increased by 34.49%, indicating that the unit price of aviation forgings increased significantly.
The profitability of the company was significantly enhanced, the operating cash flow was good, and the contract liabilities increased significantly
In 2021, the gross profit margin of the company’s overall sales was 28.33%, with a year-on-year increase of 1.69pct; The net interest rate was 11.00%, with a year-on-year increase of 4.64pct and deduction of non net interest rate of 8.24%, with a year-on-year increase of 4.19pct. The increase in net profit margin is mainly due to the increase in the company’s gross profit margin. At the same time, through the scale effect, various expense rates have decreased significantly. In 2021, the company’s four expense rates totaled 13.18%, down 3.02pct year-on-year.
In 2021, the company’s weighted roe was 11.05%, an increase of 5.58pct over last year, doubling the growth.
In 2021, the company’s net operating cash flow was 1.517 billion yuan, an increase of 130.48% year-on-year. The company’s operating cash flow was good. In 2021, the monetary capital was 6.13 billion, with a year-on-year increase of 100.83%. The company has plenty of cash on hand.
In the 2021 annual report, the company’s contractual liabilities were 829 million, a year-on-year increase of 11.69 times, a significant increase. Inventories reached 3.233 billion, a year-on-year increase of 5.57%.
In recent years, the company has continuously disposed of loss making assets and successively stripped off a large number of inefficient and loss making assets. In the past few years, the average annual asset impairment was 300 million. Through these subtraction operations, the company continues to improve quality and efficiency, reduce burden and move forward.
During the 14th Five Year Plan period, the demand for military forgings grew rapidly, and the company was the core forging asset listing platform of AVIC system, which fully benefited
The company always adheres to the first responsibility of building a strong army, highlights its main business, closely follows the rhythm of the development of China’s aviation industry, develops products covering almost all aircraft and engine models in China, and provides supporting services for foreign aviation enterprises on this basis.
The company has accumulated strong technical strength in the research and production of aviation forging products. The technology of integral die forgings, super large titanium alloy forgings, difficult to deform Superalloy Forgings, ring forgings, precision rolling, isothermal precision forgings, physical and chemical testing, etc. ranks at the leading level in China and has a number of patents; In the application process research of high-tech aviation materials (such as various superalloys, titanium alloys, special steels, aluminum alloys and high-performance composites), it ranks at the leading level in the industry.
In 2021, the company raised 1.91 billion yuan to expand the production capacity of high-end and large-scale integrated forgings and warm die forgings such as special materials. After the production capacity reaches the capacity, it is expected to significantly enhance the company’s industrial competitiveness and improve the enterprise’s operating efficiency.
During the 14th Five Year Plan period, the upgrading of aviation equipment accelerated, and the demand for both military aircraft and aeroengines increased significantly. As the national team of AVIC forging system, the company is the most beneficial company.
Profit forecast and valuation
We predict that the operating revenue of the company from 2022 to 2024 will be 10.848 billion, 13.74 billion and 17.445 billion respectively, the net profit attributable to the parent company will be 1.265 billion, 1.671 billion and 2.227 billion respectively, and the corresponding PE will be 38.23x, 28.95x and 21.72x respectively. The valuation is relatively reasonable, which matches the performance growth of the company in the next few years. It will be covered for the first time and given the rating of “overweight”.
Risk tips: 1: military aircraft demand and delivery schedule are less than expected; 2: The growth rate of defense expenditure budget is lower than expected; 3: Rising prices of raw materials; 4: Industry competition intensifies; 5: Continued stripping of non-performing assets may result in asset impairment.
