\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 760 Avic Shenyang Aircraft Company Limited(600760) )
Event: on April 9, 2022, six domestic yun-20 large transport aircraft flew from China to Serbia and delivered the first batch of fk-3 air defense missiles to Serbia.
Key investment points
The construction of the strategic air force has achieved phased results and has the ability of ultra long-range delivery. On April 9, 2022, six domestic yun-20 large transport aircraft flew from China to Serbia and delivered the first batch of fk-3 air defense missiles to Serbia, indicating that the PLA's strategic air force construction has achieved phased success and has the ability of ultra long-range delivery.
The annual business plan target was achieved, and the performance of 2022q1 increased rapidly. In 2021, the company achieved a revenue of 34.088 billion yuan, a year-on-year increase of 24.79%; The net profit attributable to the parent company was 1.696 billion yuan, a year-on-year increase of 14.60%; The non net profit deducted was RMB 1.597 billion, with a year-on-year increase of 69.93%. The expected revenue in Q1 in 2022 increased by 29.00%, the net profit attributable to the parent increased by 47.50% and the non net profit deducted increased by 58.67% year-on-year. The revenue of core business aviation defense equipment in 2021 was 33.685 billion yuan, a year-on-year increase of 24.79%, accounting for 99.7% of revenue and profit. The company increased R & D investment and consolidated its leading position in the industry. R & D expenses were 663 million yuan, a year-on-year increase of 130.34%, and financial expenses were - 250 million yuan, mainly due to the increase of interest income.
Contract liabilities & prepayments have increased significantly, and the performance is expected to be released continuously. The contract liabilities of the company in 2021 were 36.535 billion yuan, a significant increase of 672.50% over the beginning of the year; The amount of related deposits reached 45.8 billion yuan, far higher than 10.954 billion yuan in 2020. The significant growth of related deposits and contract liabilities confirms the promotion of high-profile and large order procurement mode in the military industry, which means strong downstream demand and continuous growth of orders. The company's advance payment was 21.676 billion yuan, a year-on-year increase of 308545%, mainly due to the increase of advance purchase payment, indicating that the company is actively preparing for production and its performance is expected to continue to release.
Military expenditure rose against the trend, and the leading position of the main engine factory was consolidated. In 2022, the growth rate of China's military expenditure rose against the trend, and the proportion of equipment procurement in military expenditure continued to rise. The recent conflict between Russia and Ukraine once again shows that air control plays an important role in modern war. China's Air Force plans to build a strategic air force with three generations of aircraft as the main body and four generations of aircraft as the backbone, and build a world-class air force in the middle of this century. As the leader of China's aviation main engine factory, the company will undertake the heavy task of large-scale assembly and upgrading of fighter planes. The company's main three generations of fighter aircraft series will be installed one after another. At the same time, benefiting from the expectation of the continuous launching of Chinese aircraft carriers, the supporting carrier based aircraft series will also continue to be in large quantities.
Profit forecast and investment rating: Based on the high prosperity of the military industry during the 14th Five Year Plan period and considering the company's leading position in the field of fighter aircraft in China, we predict that the net profit attributable to the parent company from 2022 to 2024 will be 2.318/31.27/4.094 billion yuan respectively, corresponding to EPS of 1.18 yuan, 1.60 yuan and 2.09 yuan respectively, and corresponding PE of 45 / 33 / 26 times respectively. It will be covered for the first time and given a "buy" rating.
Risk tips: 1) downstream demand and order fluctuation; 2) The company's profit is less than expected; 3) Market systemic risk
