\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 316 Jiangxi Hongdu Aviation Industry Co.Ltd(600316) )
Event: the company released its annual report for 2021, realizing a revenue of 7.214 billion yuan, a year-on-year increase of 42.33%; The net profit attributable to the parent company was 151 million yuan, a year-on-year increase of 14.17%.
Key investment points
In 2021, the delivery of trainer aircraft and defense products reached a new high in recent years, and the company has entered a stage of rapid growth. According to the official website of Hongdu group, in 2021, it realized the transfer and delivery of more than 100 aircraft, and some aircraft models exceeded the annual batch production task. In 2021, the number and amount of Jiangxi Hongdu Aviation Industry Co.Ltd(600316) trainer aircraft and defense products delivered reached a new high in recent years, of which the revenue of trainer aircraft was 2.377 billion yuan, a year-on-year increase of 13.52%; The revenue of missile and other defense products was 4.686 billion yuan, a year-on-year increase of 74.23%.
Supply side: mass conversion of projects under construction to fixed assets is expected to further improve production capacity guarantee. From 2020 to 2021, the company’s “plant construction project in the north of aviation city”, “plant construction project in the south of aviation city” and other projects under construction continued to be fixed, indicating that the company’s production capacity has gradually increased. The company’s prepayment at the end of 2021 was 6.690 billion yuan, an increase of 4810% over the beginning of the year (136 million yuan) and 32.29% over the end of 2021q3 (5.057 billion yuan), mainly due to the increase of prepayment for material procurement, indicating that the company is actively preparing for production.
Demand 1: the pilot training mode has changed, and there is a strong demand for higher education aircraft, which is expected to meet the accelerated growth. Pilots are an important part of the advanced combat effectiveness of the air force. The pilot training mode of the Chinese air force has changed to a new mode of “primary education aircraft directly onto higher education aircraft”, and the importance of higher education aircraft has become prominent. The company’s higher education aircraft L15 has advanced digital flight control Telex system and integrated avionics system, which can be used to train pilots of the third and fourth generation aircraft, and the training efficiency cost ratio is high. With the accelerated assembly and upgrading of new aviation equipment, the demand for pilots will increase day by day, and the company’s higher education aircraft is expected to enter a period of accelerated growth.
Demand 2: benefiting from the improvement of practical training level, the missile business is expected to maintain rapid growth. In recent years, the Central Military Commission has repeatedly emphasized strengthening practical military training. We believe that with the increasing frequency and intensity of practical training and the continuous improvement of combat readiness, the war training consumption and replenishment demand for missile consumables will continue to increase, and the company’s missile business is expected to maintain rapid growth.
Demand 3: there is great potential for the transformation of higher education machines, which is expected to open up new growth space. 1) L15 can realize low-cost reproduction of the performance and system functions of advanced fighters, and can meet the requirements of users for multiple purposes. According to the report of globegroup.com in 2019, the l-15b new generation multi-functional fighter appeared at the Dubai air show and has strong air and ground combat capabilities. Referring to the situation that its international competitor T-50 has been modified into a fighter and has been put into the actual combat deployment of the South Korean Air Force, we believe that its modification has great development potential.
2) primary education 6 is undergoing transformation and improvement; The company is carrying out the research and development of new basic education, which is expected to expand the market.
Profit forecast and investment rating: the downstream demand of the company is strong, the capacity guarantee is gradually improved, and it is expected to enter the stage of rapid growth. In view of the impact of the increase of materials and external processing fees on the gross profit margin in 2021, we lowered the previous profit forecast for 20222023. We predicted that the company’s revenue in 20222024 would be 10.169 billion yuan, 14.044 billion yuan and 17.836 billion yuan respectively, and the net profit attributable to the parent company would be 290 million yuan (previous value of 455 million yuan), 461 million yuan (previous value of 599 million yuan) and 721 million yuan respectively, corresponding to 68, 43 and 28 times of PE respectively, maintaining the “buy” rating.
Risk warning: orders and product delivery are not as expected; The modification is not as expected; Market fluctuation risk.
