\u3000\u3000 Hefei Jianghang Aircraft Equipment Co.Ltd(688586) (688586)
Leader in aviation airborne subdivision field. The company is the only supplier of oxygen system for military aircraft in China. It undertakes most of the business of auxiliary fuel tank for military aircraft and supplies an advanced fighter inerting system. At present, the equipment gap between China and the United States is large, and the armaments have been greatly changed during the 14th Five Year Plan period. Superimposed on the Centennial goal of building the army, the main models are rapidly and in large quantities, and the downstream demand is strong. In the field of civil aircraft, the C919 oxygen system and inerting system of large aircraft are still supplied from abroad. With the promotion of localization, the company can continue to expand its business. The actual combat training of the army was strengthened, the equipment consumption was accelerated, and the oxygen maintenance business of military aircraft began to work, further thickening the company’s performance.
Special refrigeration has developed rapidly and opened up new markets for the Navy. With the strengthening of equipment informatization, all kinds of electronic equipment on tanks and armored vehicles increase. They are very sensitive to high temperature and are easy to cause faults in case of high temperature. At present, most of China’s army tanks and armored vehicles are not equipped with air conditioning system, and the subsequent new production equipment temperature regulating device and air conditioning will become standard. The company’s products occupy an important market position in the installed refrigeration products of army main battle tanks and armored vehicles. The Navy market will be successfully opened in 2021 to improve the company’s performance and growth space.
The reform dividend can be expected. Hefei Jianghang Aircraft Equipment Co.Ltd(688586) is a company that entered the first pilot list of mixed ownership reform of military industry in 2016. It has established a modern salary system by introducing strategic investors, implementing employee stock ownership, focusing on the main business and withdrawing from non main business assets. After the reform, the enterprise benefits have been greatly improved and the status of the listing platform of AVIC manned aircraft and environmental equipment has been established. 2022 is the last year of the three-year reform of state-owned enterprises, Relevant actions are about to be implemented, and the high-quality assets held by AVIC airborne group are expected to be merged, which will usher in reform dividends.
Profit forecast and investment rating: Based on the development prospects of the company’s aviation and special refrigeration businesses, we predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 276 / 408 / 562 million respectively, EPS will be RMB 0.68/1.01/1.39 respectively, corresponding to 43 / 29 / 21 times of PE. It will be covered for the first time and given a “buy” rating.
Risk tips: 1) downstream demand and order fluctuation; 2) The company’s profit is less than expected; 3) Market systemic risk.
