\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 38 Aecc Aero-Engine Control Co.Ltd(000738) )
Key investment points
In 2021, the revenue increased by 18% year-on-year, and the net profit deducted from non parent company increased by 50% year-on-year
1) performance in 2021: the company achieved a revenue of 4.2 billion (a year-on-year increase of 18%), a net profit attributable to the parent company of 488 million (a year-on-year increase of 31%), and a net profit not attributable to the parent company of 466 million (a year-on-year increase of 50%). 2) The growth rate of net profit attributable to parent company is higher than that of revenue, which is mainly due to the reduction of management expense rate and asset impairment loss. The growth rate of net profit excluding non parent company is higher than that of net profit attributable to parent company, which is mainly due to the existence of government subsidies of about 69 million yuan in 2020 and the decrease of government subsidies to 31 million yuan in 2021.
2) gross profit margin: in 2021, the company’s gross profit margin was 28%, a year-on-year decrease of 0.8 percentage points. From the perspective of operating cost structure, the proportion of direct materials / revenue increased slightly.
3) net interest rate: the annual net interest rate in 2021 was 12.4%, an increase of 1.8 percentage points year-on-year. This is mainly due to the year-on-year decrease of 2.6 percentage points in the expense rate during the period and the decrease in asset impairment losses. During the period, the management expense rate decreased by 2.4 percentage points and the financial expense rate decreased by 0.25 percentage points.
The balance sheet side continues to show that the company has full orders on hand
In the middle of 2021, the company gained about 900 million contract liabilities. By the end of 2021, contract liabilities (870 million) remained high, indicating that the company had full orders on hand, which also helped the company reduce financial expenses.
The revenue target of 2022 is 23% higher than that of 2021, significantly faster than that of 2021
In 2021, the company achieved a revenue of 4.16 billion, exceeding the target at the beginning of the year by 9%. The company aims to achieve a revenue of 5.1 billion in 2022, an increase of 23% compared with the actual revenue in 2021. Previously, the ratio was 9% in 2021, and the growth of the company’s revenue target accelerated significantly.
It is estimated that the growth rate of China’s aviation engine industry will exceed that of China’s aviation engine industry by nearly 20% during the “14th Five-Year Plan”
1) “military aircraft + civil aircraft + maintenance + navigation”, the slope of aeroengine industry is long and the snow is thick, and the compound growth rate of the 14th five year plan is close to 20%. The company attaches importance to R & D and expands to non aviation fields such as missiles / combat vehicles with profound technology.
2) labor, depreciation and other fixed costs account for nearly 60% of the company’s operating costs. With the increase of business volume, the scale effect is expected to continue to appear; Superimposed on the reform of state-owned enterprises and “improving the efficiency of state-owned capital”, the company’s profit margin is expected to continue to improve in the future.
Profit forecast and Valuation: the compound growth rate of net profit is expected to exceed 30% in the next three years
It is estimated that from 2022 to 2024, the net profit attributable to the parent company will be RMB 660 / 880 / 1.14 billion, with a year-on-year increase of 36% / 33% / 29%, EPS of RMB 0.50/0.67/0.87 and PE of 46 / 35 / 27 times. Considering the high scarcity of the company and referring to the historical valuation level, maintain the “buy” rating.
Risk tips: 1) the delivery of military orders is less than expected; 2) The progress of relevant reform measures was less than expected.
