\u3000\u3 China Vanke Co.Ltd(000002) 013 Avic Electromechanical Systems Co.Ltd(002013) )
Key investment points: Avic Electromechanical Systems Co.Ltd(002013) released the 2021 annual report: the annual operating revenue was 14.992 billion yuan, a year-on-year increase of 22.64%; The total profit was 1.528 billion yuan, a year-on-year increase of 13.34%; The net profit attributable to the parent company was 1.271 billion yuan, a year-on-year increase of 18.27%.
Focusing on the steady growth of main aviation products, balanced production led to the disturbance of the company in the fourth quarter and single quarter. In 2021, aviation electromechanical products achieved an operating revenue of 11.163 billion, a year-on-year increase of 23.85%; The operating revenue of auto parts products was 1.893 billion, a year-on-year decrease of 1.14%; The air conditioning compressor business realized an operating revenue of 1.826 billion, a year-on-year increase of 52.53%.
The company continued to focus on the main aviation industry. In 2021, the proportion of the operating revenue of aviation electromechanical products in the main business revenue increased to 74.46%, and the proportion of gross profit increased to 82.49%. The company has made remarkable achievements in focusing on its main business aviation electromechanical products.
The operating revenue of Q1-Q4 in 2021 was 3.58 billion, 4.282 billion, 3.695 billion and 3.435 billion respectively; The net profit attributable to the parent company in a single quarter was 211 million, 318 million, 359 million and 383 million respectively, which increased slightly quarter on quarter. In the first quarter of 2020, disturbed by the epidemic, product delivery fell significantly, resulting in a high base of Q4 product delivery and revenue recognition in 2020. In 2021, balanced production was basically achieved throughout the year, so Q4 declined slightly in a single quarter compared with Q4 in 2020 (the operating revenue and net profit attributable to parent company in Q4 in 2021 decreased by 12.39% and 15.08% respectively year-on-year). We believe that this decline is the disturbance caused by the epidemic. In the whole year of 2021, the company's performance still maintained a steady growth.
The company's gross profit margin declined slightly, contract liabilities increased significantly, and cash flow improved significantly
In 2021, the gross profit margin of the company's overall sales was 24.41%, down 2.33pct year-on-year; The net interest rate was 9.01%, a year-on-year decrease of 0.36pct, deducting the non net interest rate of 7.41%, which was the same as last year. The decrease of gross profit margin is mainly due to the increase of employees' wages, resulting in the decrease of gross profit margin.
In terms of gross profit margin of sub products, the gross profit margin of the company's aviation products was 27.05%, down 2.74% year-on-year. The gross profit margin of auto parts was 18.79%, a slight increase of 1.33pct. The air conditioning compressor business increased by 52.53% in 2021. However, due to the sharp rise in raw material prices, the gross profit margin fell to 12.57% from 17.7% last year, down 5.13pct year-on-year, resulting in the gross profit of the business basically unchanged. Last year, the net profit of the company was not significantly thickened.
In 2021, the company's weighted roe was 9.45%, a slight decrease of 0.31pct over last year.
In 2021, the company's net operating cash flow was 6.375 billion yuan, with a year-on-year increase of 393.2%. The company's operating cash flow improved significantly. In 2021, the company's contract liabilities were 2.499 billion yuan, a year-on-year increase of 685.9%, indicating that the company's orders were good.
In 2022, it is expected that the amount of related party transactions of products sold will increase by 30%, and the industry prosperity is high
The company's business objectives in 2022 are to achieve sales revenue of 15.447 billion yuan and total profit of 1.674 billion yuan, with a year-on-year increase of 13.54% and 13.34% respectively.
The company announced that the total amount of related party transactions in 2022 is expected to be 24.914 billion, with a year-on-year increase of 24.07%. Among them, the estimated amount of related party transactions of purchased goods is 6 billion, with a year-on-year increase of 50%; The sales of products are expected to reach 13 billion in related party transactions, with a year-on-year increase of 30%. The estimated amount of related party transactions of the company shows that the industry demand is strong and the prosperity is high.
The company is the listing platform of mechanical and electrical assets of AVIC, benefiting from the trend of aviation equipment modernization and information industry in the 14th five year plan
The company is a professional integration and industrialization development platform of aviation electromechanical system business under the aviation industry. It is a system level supplier of military and civil aviation electromechanical products in China, and has an absolute leading position in China's aviation electromechanical industry.
The Fifth Plenary Session of the 19th CPC Central Committee proposed that "we should accelerate the modernization of national defense and the army, adhere to strengthening the army through science and technology, accelerate the integrated development of mechanization, informatization and intelligence, and ensure that the Centennial goal of building the army will be achieved by 2027." In the future, China's military aviation will be in the accelerated trend of new model loading, train loading and large-scale of multiple aircraft types. The electromechanical system of military aircraft will benefit from the rapid growth of the industry, which is the core driving factor of the company's endogenous growth.
Relying on the core technical advantages of military aviation, the company vigorously expands civil aviation products, has been making technical reserves in civil aviation business, and has participated in the research and development of airborne products of Chinese civil aircraft C919, Jiaolong 600, ma700, Changjiang series engines and other models. The position of the capital integration platform of the company's aviation electromechanical business is prominent. With the release of domestic civil aircraft production capacity represented by C919 and the further improvement of the localization rate of civil aircraft electromechanical system, the development of civil aircraft product support from primary to medium and high-grade products, and from single products to system level products, the market scale potential of civil aircraft electromechanical system of the company will be huge in the future.
The company is the listing platform of electromechanical system assets under AVIC system. There are still many high-quality aviation electromechanical assets under the parent company, waiting to be injected into the listed company. The company plans to spin off the air conditioning compressor business, which has poor profitability, and continue to focus on the main business of aviation electromechanical products, which is conducive to concentrating resources and expanding the main business.
Profit forecast and valuation
We predict that the operating revenue of the company from 2022 to 2024 will be 18.118 billion, 21.191 billion and 24.537 billion respectively, and the net profit attributable to the parent company will be 1.59 billion, 1.925 billion and 2.239 billion respectively, and the corresponding PE will be 27.24x, 22.5x and 19.35x respectively. Compared with other military core supporting companies, the valuation of the company is relatively low. The valuation of the company is at the absolute bottom of history. It is covered for the first time and given a "buy" rating.
Risk tips: 1: the production and delivery progress of aviation equipment products is less than expected; 2: The growth rate of defense expenditure budget is lower than expected; 3: The price of raw materials continues to rise; 4: Asset injection was less than expected.
