\u3000\u3000 Avic Heavy Machinery Co.Ltd(600765) (600765)
Event: on January 12, 2022, AVIC held the 2022 work conference in Beijing.
Key investment points
Aviation industry group sets performance targets for the new year, and the company will fully benefit. On January 12, AVIC held a 2022 work meeting in Beijing, which set the assessment objectives for 2022 as: net profit of 16.83 billion yuan, total profit of 21.99 billion yuan and eva10.3 billion yuan 500 million yuan, with a year-on-year increase of 8%, 6% and 23.7% respectively, indicating that the group is full of confidence in the stable and rapid growth of the aviation industry, and the company, as the core supplier of the aviation industry chain, will fully benefit.
Aviation development is the leading forging enterprise, benefiting from the high prosperity of the military industry. The company is mainly engaged in forging and casting, hydraulic parts, radiator and other businesses. Forging, as a key component in aviation and aviation engine, accounts for a relatively high proportion in the whole machine. The company has established high industrial barriers by virtue of its technical advantages. The company adheres to the primary responsibility of building a strong army, highlights its main business, closely follows the rhythm of the development of China's aviation industry, and develops products covering most aircraft and engine models in China. Under the background of the great armament change in the 14th five year plan and the Centennial goal of building the army, a large number of second-generation aircraft in China need to be replaced with third-generation aircraft. At the same time, the fourth-generation aircraft accelerate in large quantities, bringing broad demand to the company, Promote the rapid growth of the company's performance.
Peel off inefficient assets and Reform for new ones. During the 13th Five Year Plan period, the company moved its headquarters back from Beijing to Guizhou, stripped off non aviation civil products business such as new energy and gas turbine, cleaned up enterprises with serious losses and difficulties, consolidated its headquarters, paid close attention to the coordinated development of industries, accelerated the construction of military products R & D platform for forging and casting business, and gradually established Avic Heavy Machinery Co.Ltd(600765) Technology Research Institute and other scientific research entities, Carry out international advanced research on the application of intelligent forging and ring rolling simulation capability, strive to improve Avic Heavy Machinery Co.Ltd(600765) research and support capability in the military field and excellent competitiveness in the industry, and provide a strong guarantee for the scientific research and production of aviation weapons and equipment. The company strengthened market and service coordination and established a regional marketing coordination center to focus on the two major markets of aviation, military products and civil aviation.
The civil business grew rapidly and strengthened the company's performance. The company provides aviation and aeroengine forgings for international well-known enterprises such as Luoluo, ITP and Ge. In the future, with the continuous growth of aviation parts subcontracting market and the recovery of global civil aviation industry, the demand for forgings and other parts is rising, which will effectively improve the performance of the company's foreign trade subcontracting business. The company is the core supplier of C919 forgings for domestic large aircraft. With the arrival of aircraft certification and mass production nodes, the growth space is expected to be further opened in the future.
Profit forecast and investment rating: Based on the development prospects of the company's military and civil businesses, we expect the net profit attributable to the parent company from 2021 to 2023 to be 837 / 1174 / 1438 million yuan respectively, corresponding to EPS of 0.80 yuan, 1.12 yuan and 1.37 yuan respectively, corresponding to PE of 61 / 43 / 35 times respectively. It is 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.
