\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 765 Avic Heavy Machinery Co.Ltd(600765) )
Event: the company released the first quarterly report of 2022 and realized revenue (RMB 2.065 billion, + 15.65%) and net profit attributable to the parent company (RMB 208 million, + 174.95%).
Forging sector orders continued to increase, and capacity expansion laid a solid foundation for growth
Benefiting from the increase of market orders and the improvement of the company’s product delivery capacity in the first quarter, the revenue and profit achieved steady growth. 1) from the rhythm of the quarter, the company’s revenue from 21q1 to 22q1 was RMB 1.785 billion, 26.46 billion, 2.090 billion, 2.268 billion and 2.065 billion respectively. The revenue scale of 22q1 was basically equivalent to that of 21q3 and 21q4, or it reflected that the delivery scale of the company in a single quarter was still maintained at a high level; 2) According to the company’s previous statements, the second and third quarters of the whole year are the main part of delivery confirmation. Taking 2021 as an example, Q2 and Q3 revenue and net profit attributable to parent company account for 53.88% and 59.37% of the whole year respectively. Therefore, we think we should pay more attention to the company’s Q2 and Q3 revenue and profit. At the same time, considering that the company is still in the stage of active expansion of production capacity, and with the initial release of new production capacity, The delivery scale is expected to continue to increase in the quarter of 22 years. Based on this, we expect that the annual revenue scale of the company may continue to increase steadily.
The gross profit margin and net profit margin continued to rise, tapping potential, reducing consumption, improving quality and efficiency, driving the increasing profitability. The company’s gross profit margin in 22q1 increased by 4.14pct to 28.55% year-on-year, basically the same as that in 2021, with a gross profit margin of 28.33%. It can be seen that the company’s current focus on the main business has achieved outstanding results and the proportion of high value-added product delivery has increased orderly; Meanwhile, during 22q1, the expense rate decreased by 2.27pct to 11.04% year-on-year, and with the completion of the stripping of Liyuan Hydraulic Suzhou subsidiary, the source of the company’s apparent loss, the net interest rate increased by 5.15pct to 10.95% year-on-year, which was basically the same as the annual net interest rate of 11% in 2021. We believe that the company’s profitability may still have room to improve with the rising prosperity of the industry and the improvement of quality and efficiency after the gradual production of the company’s new production capacity.
The prosperity fully matched the industrial chain, and the predicted value of goods sold by related party transactions increased by 37.41%. Referring to Aecc Aviation Power Co Ltd(600893) related party transactions, the estimated amount of goods purchased from the AVIC system is 9 billion yuan, an increase of 32.43% over the actual amount completed in 2021. According to the company’s related party transaction announcement, it is estimated that the sales of products and labor services to related parties will be 4 billion yuan in 2022, an increase of 33.33% and 37.41% over the estimated value and actual value completed in 2021 respectively, which can reflect that the prosperity of the company is completely matched with the industrial chain. In addition, the company expects to achieve a total revenue and profit of 10 billion yuan and 1.2 billion yuan respectively in 2022. If the power source Suzhou is deducted under the same caliber, it will increase by 19.45% and 19.52% year-on-year respectively. Referring to the 2020 annual report, the company plans to achieve a total revenue and profit target of 7.38 billion yuan and 570 million yuan respectively in 2021, and the actual completion value is 8.79 billion yuan and 1.144 billion yuan. Based on the current prosperity of the industrial chain, In addition, the company’s own production capacity is still in the accelerated expansion cycle with the two fixed raising and investment in 2019 and 2021. We expect to exceed the target for the whole year.
Fixed raising and investment will strengthen production capacity, and equity incentive will help long-term development
In 2018 and 2020, the company raised 1.327 billion yuan and 1.91 billion yuan respectively for the implementation of the company’s forging, hydraulic and heat exchanger main industry capacity-building projects, continuously enhance the main industry production capacity, and expand the market share of civil products while strengthening the market advantage of military products; In addition, in 2020, the company increased capital. Anji precision casting continued to expand the upstream and downstream of the industrial chain, improve the layout, and consolidate the important position and influence of the company’s precision castings in supporting national defense weapons and equipment. Meanwhile, the company launched the equity incentive plan in 2020, granting 7.77 million shares (accounting for 0.83% of the total share capital) of restricted shares to 115 employees such as directors, managers and core technicians at the price of 6.89 yuan / share. It is expected that after the company launched the equity incentive plan, it will successfully bind the interests of the backbone of core business and continuously mobilize the enthusiasm of employees, which is expected to greatly improve the company’s management and operation ability, accelerate the release of performance and enhance the company’s core competitiveness, Help long-term development.
Investment suggestion: as the leader of China’s military aviation forging, the company has a long supporting history and strong technical strength, and has successively enhanced its production capacity through two fixed raising and investment. The leading position is stable, and is expected to benefit from the continuous upward demand brought by the batch production of new models of aviation development. At the same time, the company continues to peel off inefficient and loss making assets, While accelerating the focus on the main aviation industry, the overall profitability is still expected to improve gradually; In addition, the company launched the equity incentive plan in 2020, which is expected to further accelerate the release of performance and enhance the company’s core competitiveness at the expense control end while successfully binding the interests of the backbone of the core business. It is estimated that the net profit attributable to the parent company from 2022 to 2023 will be 1.293 billion yuan and 1.762 billion yuan respectively, with corresponding valuations of 29 and 21 times respectively.
Risk warning: military products business is not progressing as expected; The loss reduction of hydraulic civil products is less than expected
