\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 893 Aecc Aviation Power Co Ltd(600893) )
Key investment points
Event: the company released the first quarterly report of 2022 on April 29. In Q1 of 2022, the company realized an operating revenue of 5.4 billion yuan, a year-on-year increase of 44.30%, a net profit attributable to the parent company of 66 million yuan, a year-on-year increase of 92.51%, and a net profit deducted from non attributable to the parent company of 35 million yuan, a year-on-year increase of 18.54%.
The demand for domestic aeroengines accelerated and the revenue increased sharply in 2022q1. On the revenue side, in 2022q1, the operating revenue reached 5.4 billion yuan, with a year-on-year increase of 44.30%. The demand for Aeroengines was accelerated, and the year-on-year growth rate of revenue in a single quarter hit the maximum since 2020q3 (excluding). On the profit side, the company realized a net profit attributable to the parent company of 66 million yuan in 2022q1, with a year-on-year increase of 92.51%, and deducted a net profit not attributable to the parent company of 35 million yuan, with a year-on-year increase of 18.54%. The net profit attributable to the parent company increased significantly, mainly because the company received 18 million government subsidies and 22 million investment income. In terms of profit margin, the gross profit margin of the company in 2022q1 was 10.53%, a year-on-year decrease of 4.81pct, a month on month increase of 0.30pct, and the net profit margin was 1.23%, a year-on-year increase of 0.31pct. The decline of the company’s profit margin was mainly due to the expansion of the proportion of new product delivery and the significant increase of after-sales guarantee service of new products, resulting in a year-on-year increase of 128.23% in sales expenses, resulting in pressure on the profit side. The slight increase in gross profit margin month on month may indicate that the maturity of the company’s products is gradually improved and the marginal profit level is improved.
The company operates steadily and continues to increase R & D investment. The company’s 2022q1 three expenses accounted for 8.46%, with a year-on-year decrease of 4.16pct. Among them, the sales expense rate was 1.91% (year-on-year + 0.70pct), the management expense rate was 6.50% (year-on-year -4.35pct), and the financial expense rate was 0.04% (year-on-year -0.51pct). The company’s expense rate was well controlled and its operation continued to be stable. The company’s R & D investment in 2022q1 was 68 million yuan, with a year-on-year increase of 8.89%. The company continued to increase R & D investment and improve the manufacturing and production capacity of aeroengine.
Full orders in hand and smooth product delivery. The company’s operating cash flow in 2022q1 was -3.643 billion yuan, a year-on-year decrease of 878 million yuan. The decline in cash flow was mainly due to the decrease in sales receipts and scientific research grants received. At the end of the reporting period, the company’s contract liabilities were 21.282 billion yuan, a year-on-year increase of 787.99%. The company’s orders on hand were still abundant and full. The inventory was 24.173 billion yuan, with a year-on-year increase of 5.62%. The growth rate of inventory was significantly lower than that of revenue, indicating that the company’s product delivery was smooth. The company’s accounts receivable amounted to 16.445 billion yuan, with a year-on-year increase of 61.39%, mainly due to the increase of sales revenue and the overdue payment period.
The main products are expected to gradually mature, and the profitability of the company is expected to gradually improve. The company is the only enterprise in China that can develop a full spectrum of military aeroengines such as turbojet, turbofan, turboshaft, turboprop and piston. It is the only platform for the overall listing of aviation power under AVIC and the backbone of China’s aeroengine industry. In the past three years, with the continuous production and delivery of new products, the growth rate of the company’s revenue has increased steadily, while the gross profit margin and net profit margin have gradually declined, which fully shows that the aeroengine as a systematic engineering product has extremely high technical difficulty. We believe that with the gradual iterative maturity of the company’s main product performance, the company’s profitability is expected to gradually recover and its performance is expected to continue to improve.
Investment suggestion: we maintain the company’s profit forecast. It is estimated that the company’s revenue from 2022 to 2024 will be 41.771 billion yuan, 50.980 billion yuan and 62.015 billion yuan respectively, the net profit attributable to the parent company will be 1.476 billion yuan, 1.960 billion yuan and 2.940 billion yuan respectively, the corresponding EPS will be 0.55 yuan, 0.74 yuan and 1.10 yuan respectively, and the corresponding PE will be 68.2x, 51.4x and 34.3x respectively. Aeroengines are technically difficult and have high barriers to development and production. As the leader of the aeroengine industry, the company has strong monopoly and scarcity in the industry and maintains the “buy” rating.
Risk prompt event: military orders are less than expected; Product delivery is not as expected; The profit forecast is lower than expected.
