AVIC (600372): Benefits of aviation equipment high-altitude avionics platform is clearly subdivided
Investment Highlights AVIC is a high-quality listing platform for the Group’s avionics system segment. Its main avionics products cover the three major areas of aviation, non-aviation defense and non-aviation civil products. In 2018, the company’s aviation segment revenue accounted for 79%. In 2013,-In 2018, the company’s gross profit margin remained basically above 30%.
The existing military aircraft is proportional to the United States, and Russia is not dominant in terms of quantity or structure. The avionics business of the company benefits from the completion of the gap in the number of military aircraft, the upgrading of the replacement of the inventory and the upgrade of the avionics system.
According to our calculations, the average annual market space of China’s military avionics systems is about 35 billion in the next 20 years. As one of the important players in the military avionics market, the company will fully benefit in the future.
Based on the data of the three major commercial aircraft manufacturers, the average annual market space of China’s civil aircraft and avionics industry is 660 ppm.
The company participated in the development of the domestically produced large aircraft C919 through direct or joint ventures, and transformed it into a domestically produced large passenger aircraft C919 with independent intellectual property rights. The company’s civil aircraft business faces huge development potential.
Based on the “343” development strategy, the future aviation military products, non-aeronautical products and non-aeronautical defense will account for 30%, 40% and 30% of operating revenue, respectively.
The company can use the avionics technology accumulation and advantages to expand into the non-aviation defense market and automotive electronics markets, with huge potential.
Avionics Corporation (now Airborne Systems Corporation) owns a wealth of avionics system assets, and its five major avionics research institutes have high 杭州桑拿 industries, strong technical strength, and rich assets.
Comparing financial data over the years, Avionics’ revenue and profit scale are on average more than twice that of AVIC Electronics.
At present, equity custody may be a prelude to asset injection, and the company’s future development prospects are huge.
Profit forecast: We maintain our profit forecast and expect the company’s net profit attributable to its parent to be 5-20 in 2019-2021.
73 trillion, EPS is 0.
38 yuan, corresponding to the closing price of PE on May 29 is 51/45/40 times, maintaining the “prudent increase” rating.
Risk warning: military aviation orders fluctuate; domestic civil aircraft market expansion is less than expected; capital operation progress is less than expected.