\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 38 Aecc Aero-Engine Control Co.Ltd(000738) )
Key investment points
In the first quarter of 2022, the revenue increased by 31% year-on-year, and the net profit attributable to the parent company increased by 60% year-on-year
1) the first quarter of 2022: the company achieved a revenue of 1.21 billion, a year-on-year increase of 31%, a net profit attributable to the parent of 214 million, a year-on-year increase of 60%, and a net profit deducted from non attributable to the parent of 213 million, a year-on-year increase of 66%. In recent years, the company’s revenue and net profit attributable to the parent company have shown an accelerated growth trend.
2) profitability: in the first quarter of 2022, the company’s gross profit margin was 35%, basically unchanged year-on-year; The net interest rate was 18%, with a year-on-year increase of 2.2pct, mainly due to the obvious decline in R & D expense rate and management expense rate.
3) period expense rate: in the first quarter of 2022, the company’s period expense rate was 9.5%, a year-on-year decrease of 0.7pct. This is mainly due to the decrease of management expense rate and the increase of financial income.
The balance sheet side continues to show that the company has full orders on hand
In mid-2021, the company reaped large contract liabilities. By the end of the first quarter of 2022, the company’s contract liabilities (830 million) remained at a high level, indicating that the company had full orders on hand.
The revenue target of 2022 increased by 23% compared with that of 2021, significantly faster than that of 2021. In 2021, the company achieved a revenue of 4.16 billion, exceeding the target of the beginning of the year by 9%. The company aims to achieve a revenue of 5.1 billion in 2022, an increase of 23% compared with the actual revenue in 2021. Previously, the ratio was 9% in 2021, and the growth of the company’s revenue target accelerated significantly.
It is estimated that during the 14th Five Year Plan period, the compound growth rate of China’s aviation engine will be nearly 20%, and the growth of the company will surpass the industry
1) “military aircraft + civil aircraft + maintenance + navigation”. The aeroengine industry has a long slope and thick snow. The compound growth rate of the 14th five year plan is close to 20%. The company’s products fully cover all types of domestic aeroengines in China, such as military, commercial and navigation, and will fully enjoy the growth of the industry; At the same time, the company attaches importance to R & D and expands to non aviation fields such as missiles / combat vehicles with profound technology. The company is expected to grow beyond the industry.
2) labor, depreciation and other fixed costs account for nearly 60% of the company’s operating costs. With the increase of business volume, the scale effect is expected to continue to appear; Superimposed on the reform of state-owned enterprises and “improving the efficiency of state-owned capital”, the company’s profit margin is expected to continue to improve in the future.
Profit forecast and Valuation: the compound growth rate of net profit is expected to exceed 30% in the next three years
It is estimated that from 2022 to 2024, the net profit attributable to the parent company will be RMB 660 / 880 / 1.14 billion, with a year-on-year increase of 36% / 33% / 29%, EPS of RMB 0.50/0.67/0.87 and PE of 39 / 30 / 23 times. Considering the high scarcity of the company and the high certainty of future growth, and referring to the historical valuation level, maintain the “buy” rating.
Risk tips: 1) the delivery of military orders is less than expected; 2) The progress of relevant reform measures was less than expected.
