\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 893 Aecc Aviation Power Co Ltd(600893) )
Event: the company released its 2021 annual report. The company achieved a revenue of 34.102 billion yuan, a year-on-year increase of 19.1%, and a net profit attributable to the parent company of 1.188 billion yuan, a year-on-year increase of 3.63%.
The aeroengine business continued to grow, and the non main business decreased. During the reporting period, the revenue of aeroengine and derivatives business was 31.885 billion yuan, a year-on-year increase of 21.87%; Foreign trade export subcontracting business achieved a revenue of 1.292 billion yuan, a year-on-year decrease of 14.42%; The revenue from non aviation products and other businesses was 489 million yuan, a year-on-year decrease of 17.55%. We believe that the company will continue to focus on the main aviation industry. With the reduction of export and non aviation orders, the company will still be able to maintain continuous growth in performance with the main aviation engine industry in the future.
The management ability has been continuously improved, and the expense rate of the company has continued to decline during the period. In 2021, the company’s expense ratio was 8.55%, a year-on-year decrease of 1PCT. Among them, due to the improvement of the company’s management efficiency, the company’s management expense rate was 5.53%, a year-on-year decrease of 0.32%; Due to the increase of after-sales support tasks, the sales expenses increased by 59.93% year-on-year; Due to the substantial increase of the company’s contract liabilities and abundant cash flow, the financial expenses decreased by 76.11% year-on-year. We believe that with the continuous improvement of the company’s management ability and the continuous improvement of its financial situation, there is still room for the company’s expense rate to decline.
The proportion of new products is increasing, and the gross profit margin of sales has decreased. In 2021, the gross profit margin of the company’s sales was 12.49%, a year-on-year decrease of 2.48 PCT, mainly due to the impact of product structure adjustment and the increase of the proportion of new products, the gross profit margin of the company’s aeroengine and derivative business decreased by 2.86 PCT to 11.95% year-on-year; Affected by the decrease in output and the increase in the proportion of fixed costs, the gross profit margin of the company’s foreign trade export subcontracting business decreased by 2.3pct to 7.65%; Affected by the increase in sales of some high margin products, the gross profit margin of the company’s non aviation products increased by 14.97pct to 27%. We believe that with the gradual increase of subsequent new models, the company’s gross profit margin is expected to improve and is expected to usher in an inflection point.
With the upgrading of military aircraft, the output of civil aircraft increased, and the demand for Aeroengines continued to grow. Under the guidance of the Centennial goal of building the army in 2027, the construction of national defense and the army continues to advance. At present, it is in a critical period of updating the quantity of new models and the original models. The demand for new and replaced engines is growing, and the demand for maintenance support will also increase. With the continuous promotion of airworthiness certification of C919 domestic civil aviation aircraft, the number of domestic aircraft will grow day by day in the future, and the demand for domestic civil aviation engines will become increasingly urgent. China’s aviation engine market space is very broad.
Investment suggestion: the company is in a monopoly position in the whole engine manufacturing industry. It has the production capacity of all kinds of military aeroengines such as turbojet, turbofan, turboshaft and turboprop. It is the core supplier of domestic engines for China’s main battle models. The technical barrier of aeroengine development is high. With the upgrading of military aircraft gradually entering the peak, the civil engine market space will be expanded day by day in the future. As the leader of China’s aeroengine, the company’s core main industry is expected to maintain steady growth. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.46 billion, RMB 1.88 billion and RMB 2.41 billion respectively, and the PE corresponding to the current share price will be 77, 60 and 46 times respectively, maintaining the “Buy-A” rating.
Risk warning: the risk of military aircraft orders falling short of expectations; The risk that the progress of domestic civil aviation engine is less than expected.
