AVIC Mechanical & Electrical (002013) Annual Report Comments: Steady overall operation expected to rise steadily in 19 years
Event: On March 14, the company announced its 2018 annual report and achieved revenue (116.
3.7 billion, an annual increase of 4.
08%), realizing net profit attributable to mothers (8.
3.6 billion, an increase of 16 in ten years.
In 2019, the goal is to achieve 12.3 billion in revenue and maximize profits11.
Opinions: 1) The overall operation is stable and the initial business goals are achieved. The downstream payment is worse than in previous years.
Under the adjusted caliber, the company realized revenue in the income statement (116.
37 billion, +4.
08%), the goal is 105.
79%; profit growth (10.
84 billion, +11.
76%), with 108 goals.
74%; net profit attributable to mothers (8.
36 billion, +16.
Gross margin 26.
30%, 0 higher than the same period last year.
05pct, the overall price and cost of the product are stable; the net profit margin is 7.
19%, 0 higher than the same period last year.
77pct, mainly because the company issued 2.1 billion convertible bonds, reducing financial expenses by 20%.
42%, financial expense ratio is 0.
82%, an improvement of 0 over the same period last year.
56 points, part of the inventory impairment loss is estimated to be written off.
Accounts receivable in the balance sheet (67.
7.6 billion, +32.
78%), mainly due to downstream accountability, sales receivables are worse than in previous years. We think it is mainly affected by the downstream central SOEs’ three downs and downs, but the possibility of bad debts is small; inventory (41.
4.7 billion, + 3.
(86%) accounted for no significant change in the proportion of total assets, which increased with the company’s operating income; prepaid accounts (1.
98 billion, -22.
80%) decreased significantly, or caused by changes in procurement rhythm and downstream occupation of funds.
Operating cash flow in the cash flow statement was 140 lower than before.
45%, mainly because the receivables were worse than in previous years, and cash received decreased by 19 over the same period.
4.5 billion, cash expenditure increased by 8 over the same period.
25 ppm; investment cash flow increased by 47 compared to the same period last year.
92%, mainly due to the payment of the merger of Xinxiang Airlines and Yibin Sanjiang9.
6 billion; cash flow from financing increased by 531 over the same period last year.66%, mainly due to the successful issue of convertible bonds of 2.1 billion US dollars in the current period.
2) The main aviation industry is further focused. Military aviation and defense are still the main sources of performance contribution. It is expected that the company’s 19-year revenue and net profit will maintain a steady upward trend.
In 2018, the company’s military aviation and defense realized revenue (72.
8.3 billion, +8.
17%); civil 都市体验网 aviation revenue (3.
50 billion, earlier 9
66%); industrial manufacturing realized revenue (38.
6.1 billion, -0.
83%); the company further reduced non-main business and modern service industry revenue (1.
4.3 billion, -14.
The company’s operating goals for 2019 are to achieve 12.3 billion in revenue, ranking 6 in growth in 18 years.
03%; total profit 11.
5.6 billion, an increase of 6 in 18 years.
We believe that: comprehensive consideration of the company’s production capacity, reasonable business objectives, the gradual release of the capacity of convertible bond investment projects or in 2020.
3) The company is a professional integration and industrialization development platform for aviation mechanical and electrical systems business affiliated to AVIC. It is a national team in the field of military and civil aviation mechanical and electrical systems in developing countries. It has an absolute leading position in the aviation mechanical and electrical industry in developing countries.
In 2018, the company set up a specialized division within the company, integrated the internal fragmented system, realized joint research and production, and improved the efficiency of resource use.
We believe that under the trend of integrated and multi-electricity development of both military and civilian aircraft, the existing “small, scattered, and weak” electromechanical system can only be integrated to build system-level capabilities. AVIC is the only platformThe asset injection is still expected to continue. The core high-quality asset injection will drive the company to another level in system-level supply capacity, and the synergy effect will further highlight.
The establishment of an airborne company by AVIC integration is conducive to better undertake major national airborne projects and is in line with the needs of the global aviation airborne industrial aircraft and electricity integration development trend.
According to the Securities Times report, the airborne project is another national special expenditure after the large aircraft project and the two aircraft project. The capital expenditure will be about 16 billion yuan, which is conducive to the continuous expenditure of the airborne project.
Investment suggestion: AVIC is the absolute leader of absolute airborne electromechanical systems. The aerospace industry is prominent and its endogenous growth is stable. The core benefits are the acceleration of new replacement and replacement of military aircraft and the increase in the proportion of new electromechanical systems.The main growth logic is that at the same time, the market share of civil aircraft electromechanical systems in civil aircraft represented by large domestic aircraft has gradually increased, and there is huge room for domestic substitution.
The company is a professional integration and industrialization development platform for the aviation mechanical and electrical system business affiliated to AVIC.The platform is stable and unique. The initial capital operation has been started in an orderly manner. Subsequent custody of high-quality assets has continued to be injected. The synergy effect of the large mechanical and electrical industry has gradually become prominent.Continuous improvement.
We estimate that the company’s net profit attributable to mothers for 2019-2021 will be 9 respectively.
5.4 billion, the corresponding EPS is 0.
38 yuan, corresponding to PE is 27, 23, 19 times, maintaining the “Buy-A” level.
Risk warning: Weapons and equipments are not up to expectations; orders for civil aviation mechanical and electrical products and domestic replacements are not up to expectations; the institutional reform and asset injection progress are below expectations.