\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 893 Aecc Aviation Power Co Ltd(600893) )
Core view:
Event: the company released its annual report for 2021, and the company achieved a revenue of 34.102 billion yuan, a year-on-year increase of 19.1%; The net profit attributable to the parent company was 1.188 billion yuan, a year-on-year increase of 3.63%.
The increase in the proportion of new products with low gross profit reduced the profitability of the company, and the performance growth was lower than expected. Benefiting from the growth of industry demand, the company’s revenue in 2021 was 34.102 billion yuan (YoY + 19.1%). The net profit attributable to the parent company was RMB 1.188 billion (yoy+3.63%), the growth rate was lower than the growth rate of revenue, mainly due to the current gross profit margin of 12.5%, a year-on-year decrease of 2.5pct. The company’s revenue and net profit attributable to the parent company completed 107.09% and 101.33% of the 2021 budget respectively. The company’s business plan in 2022 is to have a revenue of 38.429 billion yuan (YoY + 12.7%), of which the revenue from aeroengines and derivatives is 38.270 billion yuan (YoY + 13.8%), and the net profit attributable to the parent company is 1.259 billion yuan (YoY + 6.7%), with a steady growth.
1) in terms of business, the demand of downstream customers increased, and the company’s aeroengine and derivative business revenue was 31.885 billion yuan (YoY + 21.87%). The aviation business is the main business of the company, accounting for 93.5% of the revenue. Due to the adjustment of product structure, the proportion of new products increased, and the gross profit margin of the business decreased by 2.8pct to 12.0%. We believe that although the increase in the proportion of the company’s new models has an impact on the gross profit margin in the short and medium term, it is the main engine to promote the company’s performance in the long run, which is conducive to stabilizing the company’s market position. In addition, with the mass production of new products and the accumulation of scale effect, the gross profit margin of products is expected to be stable. Due to the reduction of the scope of merger and the impact of the epidemic, the revenue of foreign trade export subcontracting business was 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%, mainly due to the decrease in material sales revenue of the company’s industrial and trade subsidiaries.
2) in terms of major subsidiaries, liming company’s operating revenue is 18.635 billion yuan (YoY + 17.1%), and its total profit is 563 million yuan (YoY + 18.2%), including 18.12 billion yuan (YoY + 17.5%) from aeroengine and derivatives business; The revenue of Nanfang company is 8.031 billion yuan (YoY + 11.7%), and the total profit is 316 million yuan (yoy-9.0%); The revenue of Liyang power is 3.020 billion yuan (YoY + 33.2%), and the total profit is 57 million yuan (yoy-36.7%).
The company’s cash flow improved significantly, and the expense rate decreased during the period. In 2021, the company received a significant increase in customer prepayments, with an operating cash flow of 16.7 billion yuan (YoY + 362.9%), which improved significantly. Meanwhile, due to abundant cash flow, financial expenses (yoy-76.1%) decreased significantly. In addition, due to the increase of after-sales support tasks, the company’s sales expenses increased by 59.9% year-on-year, and the sales expense rate was 1.4%, with a year-on-year increase of 0.4pct. Administrative expenses and R & D expenses were relatively stable, increasing by 12.4% and 5.8% respectively, lower than the growth rate of revenue. Overall, the company’s expense rate during the period was 8.6%, a year-on-year decrease of 1.0pct.
The orders of the company are full, and the related party transactions are expected to increase by 28%, and the sustainable development can be expected. The company’s contractual liabilities were 21.7 billion yuan, an increase of 675.3% over the beginning of the year, which may indicate that the company has full orders on hand. The company expects the sales amount of related party transactions with aviation industry group to be 18 billion in 22 years, with a year-on-year increase of 28.1% and sustainable growth in the future. In addition, the company’s current advance payment was 2.75 billion yuan, an increase of 446.8% over the beginning of the year, and the cash flow upstream of the industrial chain is expected to be significantly improved. The current inventory was 20.5 billion yuan, an increase of 9.5% over the beginning of the period, of which raw materials and products in process increased by 7.9% and 12.7% respectively year-on-year, basically matching the expected revenue growth of the company.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.463 billion yuan, 1.826 billion yuan and 2.22 billion yuan, EPS will be 0.55 yuan, 0.68 yuan and 0.83 yuan respectively, and the corresponding PE of the current stock price is 71x, 57x and 47x. As the absolute leader of China’s military and civil aviation engines, the company has strong scarcity, continues to be optimistic about its future development and maintains the “recommended” rating.
Risk tip: the risk that the volume of military products in the 14th five year plan is less than expected and the supply of industrial chain is less than expected.
