AVIC Hi-Tech (600862) Investment Value Analysis Report: “Light Loading” Joins Forces to Develop Composite Materials Leader
The company is located in the middle of the carbon fiber industry chain and is a leader in the domestic composite materials 北京夜生活网 industry. It is stacked in the military aviation prepreg market.
Benefiting from the upgrading of our military’s aviation equipment, especially the ramp-up volume of the straight 20 and J-20, the company’s composite materials business is expected to maintain rapid growth in the next 3-5 years.
In the future, the real estate business will gradually exit in an orderly manner. The company’s main business will focus on the new aviation materials and equipment industry. Considering the high-tech barriers in the composite materials industry and the company’s industry chain leader and long-term performance growth potential, we believe that the company’s reasonable goals for the next yearThe city size is 20 billion, corresponding to a target price of 14.
4 yuan (corresponding to 42 times PE in 2020), covering the company for the first time with a “Buy” rating.
Focusing on the main industry of new aviation materials, the company’s industry leader is highlighted.
The company is a listed company under the Aviation Industry Corporation of China, and its subsidiary AVIC Composites is superimposed in the military aviation prepreg market.
The company completed its reorganization in 2015. Its main business is from real estate development, machine tool production and sales to new aviation materials and equipment manufacturing, and it promises to orderly withdraw from the real estate business within five years.
At present, composite materials have become the company’s largest business. The subsidiary AVIC Composites’ revenue and net profit growth in 2018 and the first half of 2019 were 14 respectively.
17% / 28.
43% / 28.
68%, the company’s composite materials business is expected to enter the rapid volume period in the next 3-5 years.
The demand for military aircraft replacement aviation composite materials has expanded, and the prospect of import substitution for the civilian market is broad.
The prepreg is an intermediate material for manufacturing composite structural parts, and is widely used in the aerospace field.
With international military power rating, most of the old and old models of domestic military aviation equipment will benefit from the replacement of military aircraft and the increase in the proportion of new models of composite materials, and the rapid expansion of aviation prepreg demand.
At the same time, in the civil aircraft field, the company’s C919 completed the first batch of delivery with domestic prepregs, achieving zero breakthroughs in domestic materials in this field. The successive commercialization of C919 and CR929 in turn will also bring huge demand for domestic prepregsThe market channel has significant advantages in technological strength, and the industry leader is solid.
The company is located in the middle reaches of carbon fiber and has a stable supply chain in the industrial chain. The company purchases carbon fiber and other raw materials from upstream companies Guangwei Composites, Zhongjian Technology, etc., manufactures composite materials such as prepregs and sells them to major domestic OEMs.Research institutes, etc.
The company’s controlling shareholder, Aviation Industry Hi-Tech and Aviation Industry Basic Academy are “one institution, two brands”. Relying on the Basic Academy, the company is committed to obtaining strong technical support and maintaining a solid industry leader.
Risk factors: The demand for new aviation materials is lower than expected, the demand for machine tools and equipment is lower than expected, and product quality is at risk.
Investment suggestion: Benefiting from the upgrading of our military aviation equipment, the company’s composite materials business is expected to maintain rapid growth in the next 3-5 years, and at the same time, the orderly exit of the real estate business will 北京夜网 be followed.
The company’s 2019/20/21 EPS forecast is expected to be 0.
38 yuan, corresponding to 38/30/27 times the PE in 2019/20/21.
Considering the high-tech barriers in the composite materials industry, as well as the company’s industry chain leader and long-term performance growth potential, we give the company 14.
The target price of 4 yuan (corresponding to 42 times PE in 2020), a reasonable target city income of 20 billion US dollars in the next year, for the first time covering the company with a “buy” rating.