\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 391 Aecc Aero Science And Technology Co.Ltd(600391) )
Event: the company announced on April 12 that in 2021, the operating revenue was 3.505 billion yuan (+ 28.79%), the net profit attributable to the parent company was 21 million yuan (the same period last year was – 16 million yuan), the net profit not attributable to the parent company was 02 million yuan (the same period last year was – 44 million yuan), the gross profit margin was 12.09% (+ 1.23 PCTs), and the net profit margin was 1.33% (+ 0.97 PCTs).
Key investment points:
Turning losses into profits throughout the year, 2021q4 achieved the best quarterly profit in history
In 2021, the company’s operating revenue was 3.505 billion yuan (+ 28.79%), the net profit attributable to the parent was 21 million yuan (the same period last year was – 16 million yuan), and the net profit not attributable to the parent was 02 million yuan (the same period last year was – 44 million yuan), so as to turn losses into profits. The gross profit margin was 12.09% (+1.23pcts) and the net profit margin was 1.33% (+0.97pcts). In 2021q4, the company’s operating revenue was 1.209 billion yuan (+ 3.04%), the net profit attributable to the parent company was 69 million yuan (+ 63.08%), and the net profit not attributable to the parent company was 62 million yuan (+ 86.38%), which was the best in the history of net profit attributable to the parent company in a single quarter.
The growth rate of domestic trade products was 54.65%, and structural adjustment achieved results; The gross profit margin of foreign trade products rebounded sharply
The revenue of domestic trade aviation and derivative products of the company was 2.588 billion yuan (+ 54.65%), which increased significantly. The revenue accounted for 75.82% (+ 15.74 PCTs) and the gross profit margin was 9.73% (- 3.18 PCTs). The domestic trade aviation engine changed from scientific research to batch production, and the revenue increased rapidly; In recent years, the company has actively adjusted its product structure, and the revenue share of domestic trade aviation and derivatives has gradually increased from 38.30% in 2017 to 73.84%. Domestic trade business has become the main business of the company.
The revenue of foreign trade products is 835 million yuan (- 12.51%), accounting for 22.76% (- 14.82% PCTs). Under the influence of the continuous spread of the global epidemic, the shutdown of Boeing b737max and China US economic and trade relations, the overall demand of the civil subcontract aviation market is still low; The gross profit margin is 16.05% (+ 11.53pcts), and the gross profit margin has increased significantly, indicating that “adjusting structure and increasing benefits” have achieved results and profitability has rebounded.
The revenue of industrial civil products is 31 million yuan (- 46.17%), accounting for a relatively small proportion of revenue, with a gross profit margin of – 0.84% (- 11.90pcts). The production of industrial civil products has been small in 2021, and the products sold come from the previous inventory. This business may continue to be reduced in the future.
In terms of expenses, the sales expense is 18 million yuan (- 27.30%), and the sales expense rate is 0.50% (- 0.39pcts). The main reason for the change is that the packaging fee is included in the contract performance cost in this period; The management fee was 209 million yuan (+ 30.09%), mainly due to the reduction of social security relief, and the management fee rate was 5.96% (+ 0.06 PCTs), which basically increased with the same scale of income. The financial expense is 67 million yuan (+ 53.02%), and the financial expense rate is 1.92% (+ 0.30pcts), which is mainly due to the increase of exchange loss caused by the change of exchange rate, and the interest of lease liabilities is included in the interest expense. The R & D cost is 67 million yuan (+ 2.54%), and the R & D cost rate is 1.92% (-0.49 PCTs). Overall, the period cost rate is 10.30% (-0.51pcts).
The company’s inventory was 2.695 billion yuan (+ 6.99%), including 1.444 billion yuan (+ 504 million yuan) of raw materials and 838 million yuan (+ 9.30%) of products in process. The company continued to stock and the inventory scale was further expanded. The company’s cash flow from operating activities was -551 million yuan, and the cash received from selling goods and providing labor services decreased this year.
From the perspective of subsidiaries, the company holds two subsidiaries, Hangfa Harbin axis and fast. Among them, Hangfa Harbin axis had a revenue of 623 million yuan (+ 30.57%) and a net profit of 51 million yuan (+ 0.08%) in 2021. Faster’s main business is oil drilling equipment related business. Its previous operating results were not ideal, and its net assets were negative as of the end of the reporting period. In 2021, the revenue was 92 million yuan (- 1.11%), and the net profit was 05 million yuan (- 49.60%). The company has announced the capital reduction of fast, and natural persons withdraw. Fast has become a wholly-owned subsidiary of the company. In the follow-up, fast will develop and undertake domestic trade aviation business.
In 2022, the company expects the related party transactions of products and commodities sold by the system of Hangfa group to be 3.648 billion yuan, an increase of 26.71% over the predicted value in 2021 and 50.81% over the actual value in 2021. At the same time, the annual report disclosed that in 2022, the company expects an operating revenue of 3.983 billion yuan (+ 13,64%), an operating cost of 3.529 billion yuan and an expense of 353 million yuan; The gross profit margin is expected to be 11.40%, a decrease of 0.69pcts compared with 2021; The expected period cost rate is 8.86%, a decrease of 1.43pcts compared with 2021, and the scale effect is expected to gradually appear.
“Adjusting structure and increasing benefits”; Domestic aviation, foreign trade products and aviation bearings support the steady growth of the company
At present, the proportion of domestic trade aviation and aviation bearing products in the company’s overall revenue composition is steadily increasing, laying a foundation for the company’s stable growth; The gross profit margin of foreign trade products has been greatly improved. The follow-up company will form the core of the company’s steady growth around the three major products of domestic trade aviation (including military aviation and civil aircraft commercial development), foreign trade products and aviation bearings:
① domestic trade military aeroengine products: due to the needs of national defense modernization and continuous renewal and development of military equipment, as well as the needs of coping with the increasingly complex surrounding environment and international situation, China’s military aeroengine will form a situation of accelerated elimination of the first and second generation aircraft, stable delivery of the third generation aircraft in batch, development of the fourth generation aircraft and accelerated pre research of the fifth generation aircraft; There is great potential for domestic military aviation engine market. The aeroengines produced by the company have changed from scientific research to batch production and entered the stage of volume delivery.
② domestic trade civil aviation products: from the perspective of transportation turnover in recent years, the demand for commercial aviation engines in China will increase year by year in the future. In 2021, China civil aircraft commercial development project, the company won new tasks on the basis of the original tasks, laying the foundation for subsequent growth.
③ foreign trade products: the company’s civil aviation engine and gas turbine parts products are mainly provided to some international well-known engine companies, and both sides are basically in a strategic cooperative relationship. After more than 30 years of development, the company’s subcontracting business has formed a professional manufacturing platform for gearbox, blade, sheet metal and shaft products, and has grown into an important or even the only supplier in the Asia Pacific region for many world-famous aero-engine enterprises. In terms of foreign trade subcontracting, the company’s products gradually transition from parts to units and from low value-added to high value-added, which is conducive to the company’s improvement of business level and profitability.
④ aviation bearing: this business is mainly carried out by Hangfa Harbin axis, the holding subsidiary of the company. Hangfa Harbin axis is the only professional bearing development enterprise under Hangfa group, which undertakes the supporting tasks of four categories of aviation bearings: main shaft bearing of aeroengine, bearing of helicopter transmission system, aircraft bearing and accessory bearing.
Investment suggestions:
① the company is a major research and production enterprise of aero-engine parts in China. In 2021, the company overcame the impact of the epidemic, the change of subcontracting exchange rate and heavy scientific research and production tasks, realized turning losses into profits, and achieved the best quarterly profit in 2021q4; The growth rate of domestic trade products was 54.65%, and the gross profit margin of foreign trade products rebounded sharply; The strategy of “adjusting structure and increasing efficiency” has achieved results.
② the company has ushered in a turning point of development, and is expected to form three cores of steady growth: domestic aviation, foreign trade products and aviation bearings. The aviation engine is transferred from the domestic production of aviation products to the domestic production of aviation products; Domestic trade Chinese civil aircraft manufacturers undertake new business on the basis of existing tasks. Foreign trade products from parts to units, low value-added to high value-added transition. Aviation bearing products cover all four categories of aviation bearing supporting facilities, and fully benefit from the high prosperity of the industry.
We estimate that the company’s operating revenue from 2022 to 2024 will be 4.193 billion yuan, 5.089 billion yuan and 6.291 billion yuan respectively, the net profit attributable to the parent company will be 78 million yuan, 111 million yuan and 145 million yuan respectively, and the EPS will be 23 million yuan, 34 million yuan and 44 yuan respectively. We maintain the buy rating, the target price is 24.24 yuan, and the corresponding PE from 2022 to 2024 will be 105, 72 and 55 times respectively.
Risk warning: the adjustment of product structure is not as expected; The epidemic continues to affect international cooperation.
