\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 705 Avic Industry-Finance Holdings Co.Ltd(600705) )
Event overview
In 2021, Avic Industry-Finance Holdings Co.Ltd(600705) achieved a total operating income of 19.084 billion yuan, a profit of 7.49 billion yuan and a net profit attributable to the parent company of 4.471 billion yuan, with a year-on-year increase of 4.05%, 9.68% and 36.56% respectively; ROE10. 17%, up 0.25 percentage points from 9.92% in the same period last year. During the period, the net cash flow from operating activities was 45.212 billion yuan, yoy + 350.57%. By the end of 2021, Avic Industry-Finance Holdings Co.Ltd(600705) total assets were 456931 billion yuan and net assets were 41.578 billion yuan, with a year-on-year increase of 20.37% and 4.33% respectively, and the leverage ratio was 10.99 times.
Analysis and judgment:
After the rapid expansion of revenue from 2018 to 2019, from 2020 to 2021, Avic Industry-Finance Holdings Co.Ltd(600705) ‘s revenue increased steadily and achieved corresponding profit growth. With the strategic layout of the company’s investment in new energy, supply chain finance and military civilian integration industries, the business scale of securities, trust and equity investment is expected to grow further. Considering the short-term impact of the epidemic on economic recovery, leasing and trust industries, as well as the efforts of the company’s cost management, we fine tuned the forecast of 2022e / 2023e total operating revenue of 21.289/22.353 billion yuan to 20.294/21.309 billion yuan, and increased the forecast of 2024 to 22.374 billion yuan; Raise the forecast of net profit attributable to parent company of RMB 3.969/4.166 billion in 2022 / 2023 to RMB 4.523/4.548 billion, and increase the forecast of 2024 to RMB 4.642 billion, corresponding to EPS of RMB 0.51/share, RMB 0.51/share and RMB 0.52/share respectively. Based on the closing price of 4.14 yuan / share on March 31, 2022, PE is 8.16/8.12/7.96 times respectively, maintaining the “overweight” rating of the company.
In the opening year of industry and finance, the net profit was nearly 4.5 billion
By the end of 2021, Avic Industry-Finance Holdings Co.Ltd(600705) and its subsidiaries held 100% shares of AVIC securities, 89.04% of AVIC futures, 98.13% of AVIC international leasing, 84.42% of AVIC trust and 28.16% of AVIC finance. In 2021, Avic Industry-Finance Holdings Co.Ltd(600705) operating revenue was 19.084 billion yuan: leasing and trust contributed 54% and 21% of revenue respectively, securities business contributed about 12% and finance company contributed about 11%.
Improve the level of industrial financial services around the aviation industry chain
The largest shareholder of the company is aviation industry group, and the group and its subordinate units hold 47.05% of the shares of the company. As the only industry finance integration platform under the aviation industry group, the company vigorously develops comprehensive financial services, aviation industry investment and emerging industry investment, and creates a collaborative model of “industry, investment and finance”.
As of December 31, 2021, the total share capital of the company is 8.920 billion shares, of which the major shareholder aviation industry group holds 39.45% of the shares of the company, and the group and its subordinate units jointly hold 47.05% of the shares of the company.
Investment advice
The average Pb of several comparable financial holding companies listed on A-Shares (at the end of the third quarter of 2021) is 1.27 times, Avic Industry-Finance Holdings Co.Ltd(600705) has a certain valuation repair space. The average PE of comparable companies in 2021 is about 37.37 times, and the average value after excluding the maximum value and negative value is 22.83 times. Considering that Avic Industry-Finance Holdings Co.Ltd(600705) relies on the aviation industry and has obvious industry finance synergy under the background of military civilian integration, and considering the company’s efforts in cost management in 2022, pe9-9.5x will be given in 2021, and the target price will be raised from RMB 4.1-4.5 to RMB 4.5-4.75. To sum up, we estimate that the reasonable static market value of Avic Industry-Finance Holdings Co.Ltd(600705) is 40.2-42.5 billion yuan.
Risk tips
The business development or project profit margin of AVIC’s investment direction does not meet the expectation; The financial sub sector of the company is affected by liquidity; The fluctuation range of stock and bond markets increased; The business development of trust and other financial subsidiaries is affected by supervision; The decline of the market or the decline of the company’s investment performance.
