\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 760 Avic Shenyang Aircraft Company Limited(600760) )
In 2022, the Q1 revenue was + 29.00%, and the net profit not attributable to the parent company was expected to be + 58.67%. The company made a better start than expected. The company issued the 2021 annual report and the announcement of the pre increase of Q1 performance in 2022:
The Q1 revenue in 2022 is expected to be + 29.00% year-on-year, and the net profit attributable to the parent company is about 509 million yuan, with a year-on-year increase of + 47.5%; The net profit deducted from non parent company was 459 million yuan, a year-on-year increase of + 58.67%, exceeding the expected growth. In the second year of the 14th five year plan, the company’s R & D and production tasks are increasing day by day, and the product delivery in the first quarter showed a significant acceleration trend. We believe that the company will be in the stage of continuous capacity release in 2022, with strong production demand for mass-produced products, full tasks of R & D models, medium and long-term high prosperity will continue to strengthen, and the annual performance may exceed the expected growth.
In 2021, the company achieved an annual operating revenue of 34.088 billion yuan, with a year-on-year increase of + 24.79%. The operating revenue achieved sustained and stable growth, mainly due to the increase of products sold by the company. The net profit attributable to the parent company was 1.696 billion yuan, a year-on-year increase of 14.56%; The net profit deducted from non parent company was RMB 1.597 billion, with a year-on-year increase of 69.93%. The gross profit margin of sales was 9.76%, with a year-on-year increase of + 0.53pct, a record high and a stable growth trend. Expense side: the sales expense was 21 million yuan, a year-on-year increase of + 83.81%, mainly due to the increase of exhibition expenses; The management fee was 809 million yuan, a year-on-year increase of + 13.57%, mainly due to the increase of employee salary; Financial expenses were – 250 million yuan, and interest income increased significantly. The company increased R & D investment, and the annual R & D expenses reached 663 million yuan, a year-on-year increase of + 130.34%. Affected by this, the company’s net sales profit margin in 2021 was 4.98% (-0.45pct), a slight decline.
Contract liabilities + 672.5%, prepayment + 308545% year-on-year, abundant cash flow to promote the improvement of operation quality
At the end of the period, the company’s contract liabilities reached 36.534 billion yuan, an increase of 17.24% over the end of the third quarter and 672.50% over the same period of the previous year, mainly due to the receipt of advances from downstream customers. We believe that the large amount of advances from downstream customers will ensure the smooth progress of the company’s production expansion planning and new product development, and the company’s new product line is expected to be accelerated, reduce financial expenses and improve profitability. At the same time, the company’s ending prepayment was 21.676 billion yuan, an increase of 308545% over the same period of the previous year, mainly due to the increase of prepayment for purchase, indicating that the company is in the stage of active preparation for production and goods, and the delivery of the company’s products may continue to accelerate. At the same time, Party A’s large prepayment may have begun to flow downward, and the industry as a whole may rely on abundant cash flow to further improve the management level and improve the operation quality.
Leading suppliers of fighter aircraft are expected to fully benefit from the volume demand of existing batch production models.
The company is mainly engaged in the manufacturing of aviation defense equipment products. The current model products cover J-11 / J-15 (third generation), j-16 (third generation and a half) and other series of Air Force fighters / shipborne aircraft. Globally, the third generation and a half fighter is a highly mobile heavy weapon warehouse for air operations, and its bomb load is much higher than that of the fourth generation fighter (2500kg for the fourth generation fighter F35 and 8000kg for the third generation and a half Su-35). We believe that the fourth generation fighter cannot completely replace the combat function of the third generation and a half fighter, and there may be a large demand for the third generation fighter during the 14th Five Year Plan period.
The demand for leapfrog weapons and equipment is urgent, and fc-31 and other leapfrog weapons and equipment are expected to achieve rapid and large-scale production in the medium and long term
There are obvious generational differences between China’s military aircraft and the United States. The demand for a new generation of leapfrog weapons and equipment represented by the fourth generation aircraft is expected to further increase. As the fourth generation of medium-sized multi-purpose combat aircraft in China, the company’s new generation of Uighur Eagle (fc-31) fighters adopt the conventional pneumatic layout of single seat, double engine, outward inclined double vertical tail and full moving flat tail, and are equipped with embedded weapon cabin. It has the characteristics of high survivability, multi mission capability and high cost performance, and has excellent comprehensive combat effectiveness. We believe that the demand for leapfrog development of national defense equipment during the 14th five year plan continues to increase. The company’s new generation products such as Uighur Eagle (fc-31) fighters meet the development needs of China’s weapons and equipment. The development progress is expected to be further accelerated. After the approval, the company’s performance is expected to improve rapidly.
The stock of fighter aircraft continues to increase, opening up the maintenance market space, and the company’s profits may be further thickened
We believe that benefiting from two major factors, the back-end maintenance market capacity of the aviation industry chain will gradually increase: (1) the increase in the total number of stock aircraft caused by the increase in the demand for leapfrog weapons and equipment corresponds to the increase in the back-end maintenance market capacity; (2) The actual combat training system was further deepened, and the flight intensity and movement difficulty increased, resulting in the reduction of maintenance time.
The company has technical support and service support capabilities such as modification, aircraft maintenance, spare parts maintenance, regular inspection and special inspection. In addition, relying on the company’s internal resources, it can carry out emergency repair and large-scale repair in the field. Therefore, we believe that with the gradual rise of the back-end maintenance market, the company’s corresponding parts replacement, OEM and other maintenance businesses are expected to achieve further volume
Profit forecast and rating: as a leading fighter enterprise in China, the company comprehensively considers multiple factors such as the company’s existing product echelon volume, future model pipeline, incremental space in the back-end maintenance market, performance release promoted by the reform of military pricing mechanism, and we believe that the company has a good development trend in the short, medium and long term. Due to the company’s increased R & D investment, we adjusted the net profit attributable to the parent company from RMB 2.552/3.317 billion to RMB 2.204/2.971 billion in 202223, and the net profit attributable to the parent company in 2024 was RMB 3.864 billion, corresponding to PE of 50.24/37.27/28.66x, maintaining the “buy” rating.
Risk warning: supply supporting risk, customer order risk, company dividend fluctuation risk, etc. the first quarter performance forecast is the preliminary calculation result, and the specific financial data shall be subject to the first quarter report officially disclosed by the company.
