Aerospace Appliances (002025) 2018 Annual Report Performance Review: Steady Growth in Performance and Better Downstream Demand

Aerospace Appliances (002025) 2018 Annual Report Performance Review: Steady Growth in Performance and Better Downstream Demand
This report reads: The 2018 performance was slightly lower than expected, but we believe that the impact of the transformation of military reforms has been eliminated, and downstream military demand has continued to improve. The start of 5G construction has driven high growth of civilian products business, intelligent manufacturing supports gross margin levels, and business trends are better. Investment points: Maintain target price to 33 yuan, increase holdings.The company’s 2018 performance was slightly lower than expected, but we believe that after the impact of the military reform has been eliminated, downstream military demand has continued to improve, 5G construction has started to drive high growth in the civilian products business, intelligent manufacturing has supported gross profit levels, and business trends have improved.We maintain EPS for 2019-21.00/1.21/1.42 yuan, maintaining a target price of 33 yuan. Performance and repayments were lower than expected, and cost reduction and efficiency improvement continued to advance.1) The company’s 2018 revenue is 28.300 million (+8.5%), net profit attributable to mother 3.5.9 billion (+15.3%), slightly below our expectations.Gross margin +0.56pp, the scope of adjustment continued to optimize the supply chain management, the cost reduction reached the expected goal, the reduction was related to changes in business structure.The sales, management, and financial expense ratios decreased by 0.09pp, 0.52pp, 0.1pp, significantly improved operating efficiency.2) From the perspective of business, connector +2.1%, we believe that it is mainly related to the interconnection of the growth rate of civilian products; the motor business + 21%, which continues to maintain medium and high speed growth; the optical device +42.4%, it is expected to become a new growth point in the future.3) The company increased raw material procurement (+26 of raw materials in inventory.1%), so the prepayment is +61.2%, better downstream demand is expected; net operating cash flow -34.5%, receivable + 17%, the return situation was more than expected. Downstream demand continues to improve, accelerating the deployment of new areas.1) Under the influence of military reform and elimination, downstream military demand continues to improve; civilian products are expected to transform into 5G construction and gradually start to enter high growth.2) The company increases R & D of new products in the communications and new energy industries, with an annual R & D expense of +27.2%, speed up the layout of new areas.3) Completion and acceptance of smart manufacturing projects are included in the construction in progress -87.3%, is expected to support 杭州夜网论坛 the gross margin level in the future. Catalyst: Intelligent manufacturing project reaches production; 5G construction starts. Risk warning: military expenditure growth rate exceeds expectations; 5G advancement speed is lower than expected.