\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 96 Chengdu Ald Aviation Manufacturing Corporation(300696) )
The company issued 2021 annual report and 2022 first quarter report:
In 2021, the company achieved annual revenue of 614 million yuan, a year-on-year increase of 102.12%, net profit attributable to the parent company of 255 million yuan, a year-on-year increase of 86.47%, net profit deducted from non attributable to the parent company of 249 million yuan, a year-on-year increase of 87.70%, and the company’s performance achieved rapid growth. In 2022q1, the company achieved a revenue of 177 million yuan, a year-on-year increase of 63.10%, a net profit attributable to the parent of 66 million yuan, a year-on-year increase of 40.95%, a deduction of non attributable net profit of 63 million yuan, a year-on-year increase of 37.14%, and a higher than expected growth in the company’s revenue. We believe that the increase in the proportion of self purchased raw materials in the component assembly business of the UAV department in the revenue of 2021q4 and 2022q1 is the main reason why the growth rate of the company’s current revenue is higher than that of net profit,
Expense side: in 2021, the company’s sales expense was 834900 yuan, a year-on-year increase of + 47.53%, mainly due to the increase of the company’s business and the corresponding increase of transportation expenses; The management fee was 21 million yuan, a year-on-year increase of – 4.22%; Financial expenses were -1271400 yuan, a year-on-year increase of -279.72%, mainly due to the increase of deposit interest income; The R & D cost was 17 million yuan, a year-on-year increase of + 53.99%, mainly due to the increase in investment in technology R & D, testing and testing. In 2021, the expense rate during the sales period was 6.16%, with a year-on-year decrease of 4.86pcts; In 2022q1, due to the decrease of management expense rate and the increase of interest income, the expense rate continued to decline to 3.32%, a record low.
We believe that the substantial improvement of the company’s performance in 2021 and 2022q1 is mainly due to the continuous and rapid growth of aviation equipment construction demand. On the one hand, the company’s new production capacity of precision CNC machining is released one after another. On the other hand, at the end of the industrial chain, the company is gradually realizing the transformation from a single process / machine type to a multi process with full military and civilian coverage. The capacity utilization rate of special processes of heat meters has increased steadily, and the component assembly business has begun to be delivered and settled, With the gradual expansion of multi process business in the industrial chain, the company’s performance is expected to enter the track of rapid growth.
The company has upgraded from single process / model to multi process and whole process business of military and civil aviation, and UAV assembly business is the new driving force
The company is striving to build the whole process business capability of aviation parts “CNC precision machining – special process processing – component assembly”, which is in the process of steady progress, and has passed the review and confirmation of the main engine factory and relevant customers:
\u3000\u30001. CNC precision machining business: focus on the construction of key parts, important parts, complex parts and small batch flexible production capacity of aviation parts. The CNC intelligent manufacturing project of Xindu Branch / subsidiary has been put into operation in 2021 and is gradually releasing the CNC precision machining capacity. The company is the largest private supplier of a main engine factory subordinate to AVIC, and the supplier with the largest proportion of key, important and complex parts.
\u3000\u30002. Special process business: the company raised funds to invest in the construction project of heat meter treatment and nondestructive testing production line in 2017, and began to carry out surface treatment business successively in the second half of 2019. From 2020 to 2021, the capacity utilization rate of special process of heat meter increased steadily. In 2021, the company actively expanded the heat treatment business of multiple varieties and models such as military / civil aviation and aviation, and upgraded the main production line facilities to optimize production efficiency and improve capacity utilization. The company is one of the few private enterprises in China with the ability of full process of special technology. 3. Component assembly business of the Ministry: it has passed the review of military aircraft assembly qualification, obtained the approval of French SaiFeng landing gear component assembly qualification, and has carried out the component assembly business of a certain UAV, a certain military aircraft and several civil aircraft types. During the reporting period, it has undertaken and successfully completed the assembly of components in the complex central section of a certain UAV and the overall delivery of the fuselage section of the aircraft, realizing the upgrading of the whole process capability from part processing to large components.
In the field of precision machining, the company has mastered many core technologies such as high-precision blind hole machining and complex deep cavity machining, and is in an obvious advantageous position in the industry. On the client side, the company is the only strategic partner and one of the four designated assembly units in the field of machining and heat treatment of a main engine factory subordinate to AVIC, and is the first private enterprise to promote the whole process business of “raw materials – NC precision machining – special process processing – component assembly”. We believe that as a comprehensive aviation manufacturing base of military and civil aircraft in China, the company is in the process of accelerating the upgrading from a single process / model to a multi process and whole process business of military and civil aviation. The relevant products of the company are expected to achieve rapid volume with the growth of demand, and the performance is expected to grow rapidly with this process.
Actively promote the work of raising investment and expanding production, and improve the level of intelligent manufacturing
In August 2021, the company raised a total amount of 500 million yuan to promote the construction of aviation parts intelligent manufacturing center project. In 2020, the company’s theoretical NC processing capacity was 1129800 man hours, and the capacity utilization rate was 87%. The raised investment project is expected to increase the theoretical production capacity of NC processing by 1232000 man hours / year, and increase automation and intelligent systems such as automation equipment and control system, testing equipment automation and control system, Internet of things and control system. The project is expected to be put into operation in April 2023, with a production period of three years. After it is completed, it is expected to increase the annual revenue by 234 million yuan and the annual net profit by 60 million yuan. We believe that the implementation of the fixed increase and raised capital investment project will comprehensively improve the company’s intelligent manufacturing level, enhance the company’s core competitiveness, and further expand the company’s capacity to undertake domestic large aircraft, military main battle equipment and military UAV business on the basis of expanding the company’s existing business capacity.
Profit forecast: To sum up, we believe that the company’s military products business may fully benefit from the leapfrog equipment development process of the 14th five year plan, and is expected to continue to grow rapidly in the next 3-5 years; Civil products business is expected to achieve further volume with the gradual landing of China’s large aircraft projects. At the same time, considering the continuous promotion of the company’s military and civilian full coverage, multi process and whole process layout, the performance is expected to grow rapidly on this basis. On this assumption, we will increase the company’s predicted revenue from RMB 800 / 1096 million to RMB 920 / 1245 million from 2022 to 2023, and the predicted revenue in 2024 is RMB 1719 million, the corresponding net profit attributable to parent company is RMB 378 / 515 / 698 million, and the corresponding PE is 27.50/20.22/14.92x. Risk warning: the risk of declining market competitiveness; Risk of fluctuations in the company’s military products business; Risk of raw material supply; The risk that the progress and income of the raised investment project do not meet the expectations, etc.
