AVIC Shen Fei (600760) 2019 Semi-annual Report Performance Comment: Balanced Production Causes 19H1 Performance to Increase Significantly, High-speed Growth Can Be Expected
This report reads: The 19H1 performance of balanced production actuators has greatly increased; the company is a leader in fighters, and demand has improved for the long term. “Price increase + capacity expansion” has helped rapid growth in short-to-medium-term performance.
Investment points: Maintain target price of 48 yuan and increase holdings.
The balanced production led to the growth of 19H1 performance, which was in line with expectations; the company is a fighter leader, and downstream demand has been good for a long time.
We maintain the EPS for 2019-21 to 0.
04 yuan, maintaining a target price of 48 yuan.
Performance is in line with expectations, and balanced production leads to high growth.
1) AVIC Shenfei achieved revenue 112H in 2019H1.
800 million (+80.
4%), net profit 4.
300 million (+331.
7%), the growth in performance was mainly due to balanced production, and the estimated 19H1 revenue accounted for most of the planned revenue (220.
300 million) 51.
2% (32% in 2018).
2) Gross profit margin +0.
49pp, sales rate -0.
03pp, management expense ratio -1.
57pp, we believe that the first half of the year is to increase the delivery of the first half of the year to dilute fixed costs and period expenses; the company’s expansion of R & D investment, R & D expenses +47.
At the same time, the investment income was -37.54 million yuan, a decrease of 4.82 million yuan each year, basically the expansion of Shenfei’s civil aircraft in the first half of the year.
3) Account received in advance -79.
6%, mainly due to the prior account receivables in the current period is recognized as income; purchases increased in the first half of the year, accounts payable + 24%, raw materials in inventory +35.
1%, indicating that demand continues to improve.
The fighter leader, demand continues to boom, and profit margins can be expected to increase.
1) The company is a leader in fighter aircraft and has long benefited from the development of high-level air power compensation.
2) Intergenerational upgrades of fighter aircraft will bring about higher product prices, investment projects will further increase production capacity, and the company’s short- and medium-term performance will promote rapid growth.
3) We expect that the pricing reform of military products will be gradually implemented during the year. As the only domestic assembly plant that implements distribution incentives, the company’s profit margin is expected to increase.
Catalyst: Military pricing reform.
Risk Warning: New products are listed below expectations; military spending growth is 南京桑拿网 slower than expected.