AVIC Electronics (600372): Leading military wings for avionics system development

AVIC Electronics (600372): Leading military wings for avionics system development

The event company released its 2018 annual report. In 2018, the company achieved operating income of 76.

43 ppm, a ten-year increase of 8.

8%; net profit attributable to shareholders of the listed company is 4.

7.9 billion, a decrease of 11 per year.

6%, net profit after deduction to mother 1.

7.4 billion, down 53 before.


Brief Comment 1. The company achieved operating income of 76 in 2018.

43 ppm, a ten-year increase of 8.

8%; net profit attributable to shareholders of the listed company is 4.

79 trillion, down 11 a year.

6%, net profit after deduction to mother 1.

7.4 billion, down 53 before.


The company’s total revenue has grown steadily and its net profit has decreased.

The reasons for the decrease in net profit are: 1) The gross profit margin of aviation products in 2018 was 29 due to the increase in the cost of purchasing raw materials for its main business aviation products.

57%, down 4 each year.

61 single companies, the company is expected to improve in 2019; 2) interest expenses in 20183.

32 ppm, an increase of 40 in ten years.

3%, mainly due to the accrued interest expenses of the total 24 trillion convertible bonds issued in December 2017; 3) Asset impairment losses in 20181.

63 ppm, an increase of 82 in ten years.

5%, due to the withdrawal of coins from the subsidiary Baocheng Instrument for bad debt losses.

The company expects to achieve operating income in 2019.

7.0 billion, achieving a net profit of 6.

1.2 billion.

The production and operation conditions are stable and the operating cash flow is sufficient.

Company product sales increased by 8.

8%, production and operation are in good condition.

In general, the company’s production, stable operating conditions, reasonable asset 天津夜网 structure, stable operating cash flow, and revenue growth guarantee the company’s future working capital and payment of convertible bond interest.

Managed airborne companies injected expectations.

The company and the airborne company signed the “Custody Agreement” to host its 14 companies and institutions, which is conducive to strengthening the integration of the airborne sector, accelerating the integration of aircraft and industrial aircraft and electricity, and promoting the professional development of the company’s avionics products and further deepeningThe reform of the system and mechanism has improved the management efficiency of the company and is expected to increase the company’s performance in the future.

2. The company’s initial stock repurchase plan demonstrates confidence and promotes long-term stable 南京夜网论坛 development.

The company disclosed on January 31, 2019 that it intends to use its own funds and self-raised funds to repurchase the company’s shares in a centralized bidding transaction, and the total amount of repurchased shares is not less than 1.

5 trillion and not more than 3 trillion yuan, and the repurchase price does not exceed 18.

50 yuan / share. The repurchased shares will be used for employee equity incentive plans and conversion of convertible bonds.

The company’s stock repurchase plan reflects the company’s confidence in future development, and also reflects that it is believed to gradually surpass the company’s true value, which is conducive to enhancing market confidence and promoting the company’s long-term stable development.

3. At present, there is still a gap between the overall military equipment and the United States, and the construction of equipment urgently needs to be accelerated.

Under the background of external defense demand and internal policy promotion and the urgent need to accelerate the construction of military aircraft equipment, the modernization process of domestic military aviation equipment will continue to accelerate.Before 2020, the second-generation aircraft will be gradually phased out, and the third-generation aircraft will be the main body, and it will be transformed into the fourth-generation aircraft. The third-generation and fourth-generation fighters will successively usher in batch deliveries to varying degrees.

It is estimated that the space for the military aircraft market in the next ten years will be USD 200 billion, and the average annual market space for avionics will exceed USD 5 billion.

4. The company is currently the leading domestic avionics system company. The military and civil aviation markets are broad, and policy support has helped the development of airborne system technology; hosting airborne companies and stock repurchase injections are expected to enhance market confidence and help the company’s long-term stable development.

We are optimistic about the company’s future development prospects and predict that the company’s net profit attributable to mothers from 2019 to 2021 will be 6 respectively.

5.4 billion, 7.

8 million yuan, 7.

79 ppm, an increase of 36 per year.

42%, 8.

22%, 10.

08%, the corresponding 18 to 20 years of EPS are 0.

37, 0.

40, 0.

44 yuan, corresponding to the current expected PE of 45.

06, 41.

64, 37.

82 times, give a buy rating.

Risk warnings 1. The development of military aircraft is less than expected; 2. The development of civilian models such as C919 is less than expected; 3. The development of airborne companies is less than expected.