\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 765 Avic Heavy Machinery Co.Ltd(600765) )
In 2021, the net profit attributable to the parent company was + 159.05%, and the profitability was significantly improved
The company released its 2021 annual report. The company achieved an annual operating revenue of 8.79 billion yuan, a year-on-year increase of + 31.23%. The operating revenue achieved sustained and stable growth, mainly due to the increase of market orders and the improvement of the company’s delivery capacity. The net profit attributable to the parent company was 891 million yuan, with a year-on-year increase of 159.05%, which was higher than expected. The main reason was that the increase of costs was less than that of operating revenue, and the profit margin was improved. The net profit after deducting non recurring profits and losses was 724 million yuan, a year-on-year increase of 166.60%. By product, the forging and casting industry achieved a revenue of 6.699 billion yuan, a year-on-year increase of + 34.49%; The revenue of hydraulic environmental control industry was 2.091 billion yuan, a year-on-year increase of + 21.78%. In 2021, the gross profit margin of sales was 28.33%, with a year-on-year increase of + 1.69pct; In terms of period expenses, during the period, the company incurred sales expenses (73 million yuan, + 6.01%), management expenses (657 million yuan, + 10.55%), financial expenses (81 million yuan, – 36.26%), R & D expenses (346 million yuan, + 17.47%), and the period expense rate of the company was 13.17%, a year-on-year decrease of 3.04pct, a record low. Affected by this, the net profit margin of sales reached 11.00%, with a year-on-year increase of + 4.64pct, and the profitability was significantly improved.
The company is expected to usher in the improvement of capacity utilization brought about by the optimization of product structure (small batch and multiple varieties affect capacity allocation). At the same time, the marginal cost decreases under the scale effect after the climbing of new products (including the reduction of fixed cost allocation and the decrease of variable cost caused by manufacturing upgrading). The profitability may enter the track of continuous improvement on the basis of large-scale production. At the same time, from 2015 to 2021, due to the active stripping of loss and inefficient businesses in non main industries such as new energy and gas turbine industry, the company made an average annual provision for asset impairment of 310 million. We believe that in the future, the impairment or significant reduction of non production and operation assets withdrawn due to stripping assets will also significantly improve the company’s profits.
Contract liabilities continued to rise, and sufficient cash flow promoted the improvement of operation quality
At the end of the period, the company’s contractual liabilities reached 829 million yuan, an increase of 10.65% over the end of the third quarter and 116874% over the same period of the previous year. The cash flow generated from current operating activities was 1.518 billion yuan, an increase of 130.48% over the same period of the previous year, all of which achieved a significant increase. We believe that sufficient cash flow may comprehensively improve the management and operation quality of the company, ensure the smooth progress of production expansion planning and new product development, reduce financial expenses and improve profitability. At the same time, the company’s ending prepayment was 301 million yuan, an increase of 89.99% over the same period last year, and the book balance of raw materials in ending inventory was 1.427 billion, an increase of 39.99% over the same period last year, indicating that the company is in the stage of actively preparing production and goods, and is optimistic about the continuous improvement of product delivery speed.
Increase investment in Anji precision casting and accelerate the industrial layout of forging and casting industry
On March 14, the company announced that it plans to increase the capital of Anji precision casting by 50 million yuan in cash. We believe that this capital increase will help accelerate the industrial layout of the company in the forging and casting industry, help Anji precision casting improve the manufacturing process level and production capacity of key core products, strengthen the main business of precision casting, improve the shareholder structure, optimize the allocation of resource elements, and improve the business robustness and anti risk ability.
The release of new production capacity is imminent, and the expansionary demand for aircraft & aeroengine forgings drives the high growth of construction period performance
As a leading aviation forging enterprise, the company produces aircraft fuselage wing structure forgings, aero-engine disc and shaft and ring forgings, aerospace engine ring forgings and small and medium-sized forgings, or will fully benefit from the expansion trend of forging demand. In order to meet the dual drive high business cycle of military aircraft weapon equipment replacement and domestic civil aircraft development, the company raised 1.327 billion yuan and 1.91 billion yuan in 2018 and 2021 respectively for the construction of advanced forging, civil aviation ring forging, key hydraulic basic parts supporting, high-efficiency heat exchanger, aviation precision die forging and isothermal forging production line projects, so as to improve the company’s Aviation Precision Die Forging Research and production supporting capacity, Realize the industrial transformation and upgrading of the company and meet the market demand of large precision die forgings for Chinese military aircraft, commercial aircraft and international commercial aircraft. With the completion and production of the company’s raised investment projects from 2022 to 2025, the company’s production capacity will be improved to further consolidate and strengthen the company’s leading position in the forging industry.
Profit forecast and rating: we believe that the company’s core business will benefit from the upgrading of our military aviation equipment, and is expected to continue to grow rapidly in the next three years; At the same time, with the gradual landing of China’s large aircraft projects, the company’s civil aircraft forging and casting products are expected to achieve large-scale growth by leaps and bounds. Due to the obvious rise in nickel price recently affecting the purchase price of the company’s raw materials, we lowered the company’s net profit attributable to the parent company from 1.394/1.981 billion yuan to 1.309/1.896 billion yuan from 2022 to 2023, and the net profit attributable to the parent company in 2024 was 2.586 billion yuan, corresponding to EPS of 1.24/1.80/2.46 yuan / share and P / E of 36.96/25.51/18.70x, maintaining the “buy” rating.
Risk warning: the risk of military products business fluctuation; Risk of raw material supply; The risk that the progress and income of the raised investment project do not meet the expectations, etc.
