AVIC Aircraft (000768) Interim Review: Model batch production and delivery capabilities continue to improve, leading large aircraft heading towards new development journey
Event: The company released the semi-annual report for 2019: 1) The company’s H1 in 2019 achieved operating income of 146.
8.8 billion, a 10-year growth rate of 10.
67%, compared with 23 in the same period last year.
47%; net profit attributable to mothers2.
24 ppm, an annual growth rate of 38.
05%, an average of 77 in the same period last year.
33%; net profit after deduction of non-return to mother1.
48 ppm, a year of growth of -8.
10%, an average of 166 in the same period last year.
40%; 2) In a single quarter, the company achieved operating income of 83 in Q2 2019.
13 ppm, a 10-year increase3.
64%, an increase of 30 from Q1.
40 %%; net profit attributable to mothers1.
850,000 yuan, an increase of 36 in ten years.
44%, an increase of 374 from Q1.
The company’s performance is in line with market expectations.
Opinion: The heavy volume of new models has promoted the company’s main business of military and civilian aircraft assembly to grow steadily, product structure adjustment or short-term replacement of gross margin.
The company achieved a ten-year increase in operating income in the first half of the year.
67%, excluding the impact of Shenfei and Xifei on the same period of the previous year, and the adjusted revenue growth rate was 14.
85%, reflecting the continuous improvement of the company’s key model batch production capacity, balanced production and timely delivery to ensure the smooth completion of military tasks.
The company’s gross profit margin for the first half of the year was 5.
67% compared to the same period last year (5.
89%) down 0.
We believe that the slight decline in profitability may be caused by product structure adjustments. Some models have low added value or key models are delivered at tentative pricing, resulting in increased company revenue but limited profit increase.
The growth rate of performance is faster than the growth rate of revenue. In addition to the normal exception factors, Shen Fei ‘s civil aircraft and Xi Fei ‘s civil aircraft are no longer consolidated to promote the decline in the expense ratio during the period is also an important reason.
The company’s first half performance growth (38.
05%) significantly faster than revenue growth (10.
67%), in line with the characteristics of historically due to its own half-yearly reported performance growth faster than revenue growth; from the cost side, because Shen Fei civil aircraft and Xifei civil aircraft are no longer combinedPeriod expense ratio (4.
00%) compared with the same period last year (4.
76%) decreased by 0.
76pct, the rate of decline during the period (0.
76pct) is greater than the decrease in gross profit margin (0.
In addition, Shenfei civil aircraft and Xifei civil aircraft contributed zero net investment income during the same period.
2.5 billion (disposal of investment income of subsidiaries 0.
600 million yuan, long-term equity investment income -0.35 ppm), which is also one of the reasons for the excessive growth in performance.
The company’s operating cash flow is not good due to short-term pressure or due to changes in the payment rhythm of end customers and upstream procurement under balanced production.
The company’s net operating cash flow was -36.
460,000 yuan, a decrease of 20 compared with the same period last year.
88 trillion, down 134 a year.
08%; from the perspective of cash inflows, the company’s revenue in the first half of the year increased by ten years.
67%, while accounts and bills receivable were 176.
1.8 billion, an increase of 37 over the same period last year.
930,000 yuan, up 27 before.
45%, the customer’s repayment rhythm changes or preliminary; from the cash point of view, the prepayment amount is 32 at the same time.
69 ppm, up 57 per year.
52%; inventory is 156.
47 trillion, an increase of 15 earlier.
01%, the company’s purchase expenditure growth under balanced production is also a reason.
For the first time, focus on the core investment logic of the company’s mid- and long-term value: 1) Under the Air Force 杭州桑拿网 construction strategy of “integration of air and space, both offensive and defensive”, there will be a significant gap in combat support aircraft.Benefit.
2) The company’s military-to-civilian business cuts into the mainline civil aircraft assembly and parts and components business. The advantage of the card position may promote the expansion of the civil aircraft market with space.
3) As the assembly body of large domestic aircraft, the company may benefit from the release of performance brought about by possible breakthroughs such as the reform of the military pricing mechanism.
4) The company may promote the reform of state-owned enterprises, improve the internal governance structure, and promote the reform of incentive mechanisms to mobilize the enthusiasm of employees. In the future, it is expected to significantly improve the company’s operating management quality, maintain profit forecasts and maintain a buy rating.
We maintain the company’s attributable net profit forecast for 19 to 6 years.
78 ppm, 19/20/21 EPS are 0.
35 yuan / share, currently sustainable (2019/08 / 29,15.
87 yuan / share) corresponding to PE, 66, 53 and 45 times.
As the only general assembly target of large-scale military aircraft in the country, the company enjoys exclusive procurement of scarce core assets for heavy military aircraft purchases, overlapping military product pricing systems, and state-owned enterprises to improve quality and efficiency. In the future, there may be better performance and steady growth and the potential for reform of state-owned enterprises.Rating risk tips: 1) Uncertainty in the timing and magnitude of military aircraft purchase price adjustments; 2) New aircraft development, delivery progress, and use effects are less than expected; 3) Civil aircraft and other military-civilian integration business development risks