\u3000\u3 Guocheng Mining Co.Ltd(000688) 239 Guizhou Aviation Technical Development Co.Ltd(688239) )
Key investment points:
Guizhou Aviation Technical Development Co.Ltd(688239) released the annual report of 2021: the company achieved an operating revenue of 960 million yuan last year, an increase of 43.11% over the previous year; The net profit attributable to shareholders of listed companies was 139 million yuan, an increase of 91.13%; The net profit attributable to the parent company after deduction was 124 million yuan, an increase of 76.25%. The profit distribution plan of the company in 2021 is to distribute 2 yuan (including tax) for every 10 shares.
The core supplier of aerospace ring forgings benefited from the strong and rapid growth of military demand. In 2021, the sales of aviation forgings reached 669 million yuan, a year-on-year increase of 29.99%; The sales revenue of Aerospace Forgings was 150 million, with a year-on-year increase of 97.71%; The total sales of aviation and Aerospace Forgings is 819 million, accounting for 85.31% of the main business, occupying an absolutely dominant position. In 2021, 5909 tons of forgings were sold, with a year-on-year increase of 31.59%. The average unit price of forgings was 159600 yuan / ton, an increase of 8.59% over the average price in 2020
The profitability of the company has improved significantly. The strength of raw material preparation has increased, and the cash flow of operation has weakened. In 2021, the gross profit margin of the company’s overall sales was 32.6%, an increase of 3.76pct year-on-year; The net interest rate was 14.48%, with a year-on-year increase of 3.64pct and deduction of non net interest rate of 12.91%, with a year-on-year increase of 2.43pct. The increase in net profit margin is mainly due to the significant increase in gross profit margin caused by product price increase, and the superposition of scale effect leads to the improvement of profitability. In 2021, the company’s weighted roe was 17.44%, an increase of 3.36pct over last year. In 2021, the company’s net operating cash flow was – 53.32 million yuan, up from 123 million yuan in the same period last year. The company’s operating cash flow weakened significantly year-on-year. The main reason is that affected by the strong downstream demand, the company increased the stock of raw materials, and the value of raw materials and products in process in the inventory of 2021 annual report increased by nearly 160 million.
The demand for Aeroengines is strong, and the company has benefited significantly as the main research and development unit of aviation ring forgings. The company has long been committed to the application research of new aviation materials and the research of advanced manufacturing technology of aviation forgings, and has participated in the synchronous development and model improvement of many pre researched and under research models of aviation engine ring forgings in China, including a new generation of military aeroengines and domestic commercial aeroengines of Changjiang series, It is one of the main research and development units of aeroengine ring forgings in China. The overall R & D strength and core technology of the company are highly competitive. Domestic aero-engine is one of the biggest weaknesses in China’s aviation industry, and it is also a weak link in urgent need of key breakthrough. With the upgrading of military aircraft and the acceleration of train loading, and the increasing proportion of domestic superimposed engines, China’s military engine industry will usher in a period of rapid development. Core suppliers of engine industry chain will continue to benefit. As one of the core suppliers of engine ring forgings in China, the aviation forging business is expected to continue to maintain rapid growth during the 14th Five Year Plan period. The company has a long-term and stable cooperative relationship with China Aviation Engine Development Co., Ltd., won the honorary title of “excellent supplier” of 2017 issued by China Aviation Engine Development Co., Ltd., and participated in the development of Changjiang series aeroengines. Its long-term product service experience and market first mover advantage ensure the issuer’s competitiveness in the domestic commercial aeroengine ring forging Market in the future. With the mass production of domestic large aircraft, the domestic large aircraft industry chain is expected to benefit.
Profit forecast and valuation
We predict that the operating revenue of the company from 2022 to 2024 will be 1.281 billion, 1.749 billion and 2.302 billion respectively, the net profit attributable to the parent company will be 211 million, 286 million and 385 million respectively, and the corresponding PE will be 34.86x, 25.69x and 19.11x respectively. The valuation is relatively reasonable, which matches the performance growth rate of the company in the next few years. It will be covered for the first time and rated as “overweight”.
Risk tips: 1: the development and production progress of domestic aeroengine is 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.
