AVIC (600372): Broad prospects for military and civilian business of avionics system platform

Leading 杭州桑拿网 domestic avionics companies and military-civilian business jointly drive development. It is expected to benefit the state-owned enterprise reform company for a long time. It is the avionics system development platform affiliated to AVIC Group and a leader in the domestic avionics field.

With the upgrading of domestic military aviation equipment and the advancement of domestic production of large aircraft industry chains in the future, the company has broad business development prospects.

At the same time, the company actively expands its business layout in the non-aeronautical civil products and non-aeronautical defense fields; the volume of assets under management is much larger than the company’s volume, and there is a lot of room for asset securitization in the future.

We expect the company’s EPS for 2019-2021 to be 0.

30 yuan, 0.

32 yuan and 0.

37 yuan, target price range 17.

70-18.

30 yuan, the first coverage given a “buy” rating.

  Leading domestic avionics enterprise, benefiting from growth in military and civilian demand The company has a rich avionics product lineage that covers multiple avionics equipment.

The company’s military avionics product development capabilities are leading in the country, and some products reach the same level of foreign technology; civil avionics plays an important role in supporting the domesticization of the civil aviation manufacturing industry chain such as the C919.

Avionics system is a system that performs flight mission functions on aerospace vehicles and has an important impact on the overall performance of the aircraft. According to our gradual forecast, the annual production and maintenance market size of military avionics systems will be USD 44-55.6 billion.

The rapid deployment of new military aviation equipment is the main driving force for the company’s short-term business growth.

The domestic large aircraft industry chain is accelerating and perfecting, and the domestic market for the avionics industry chain supporting domestic market is broad.

  Taking full advantage of technological advantages, avionics for non-aeronautical defense and non-aeronautical civil product development involves multiple basic subject areas, and its technological achievements have high versatility and application potential in the direction of electronic information products.

In the non-aerospace industry, the company follows the principle of “same technology, same industry roots, and same value” to promote core technology transformation, and continuously achieves the direction of “high-end equipment project scale, development project industry department, and high value-added project service”.Industry development.

  The reform of state-owned enterprises is the general trend, and it is expected to benefit from the process of asset securitization in the long run. The reform of state-owned enterprises is the general trend. In 2019, the merger of North-South ships and the operation of ship-based capital is expected to drive the process of asset securitization in the military industry.

The company is entrusted to manage the assets of the five core institutes in the group’s avionics field. In 2018, the company’s external custody assets business income was 5 of its own.

74 times; calculated based on the company’s net interest rate, the external assets correspond to 27.

70 million net profit scale.

The scale of the company’s externally managed assets is much larger than itself, and there is a lot of room for future asset securitization.

As AVIC’s avionics industry platform, in the long run, the company is expected to benefit from the avionics securitization process.

  Leading domestic avionics company, with broad prospects for the military and civilian markets. For the first time, we have given a “buy” rating. We expect the company to achieve operating income of 85-20 in 2019-2021.

5 billion, 95.

6.7 billion and 107.

1 billion, net profit attributable to mothers5.

2.8 billion, 5.

6.4 billion and 6.

48 ppm, corresponding EPS is 0.

30 yuan, 0.

32 yuan and 0.

37 yuan.

From December 2013 to the present, excluding the estimated extreme value from October 2014 to March 2016, the company’s historical average assessment level is 60.

25 times PE.

We are optimistic about the future development potential of the company’s aviation products business and the layout of scarce industrial platforms. Based on the company’s historical average income level, we will give 59-61 times PE estimates in 2019 with a target price range of 17.

70-18.

30 yuan, the first coverage given a “buy” rating.

  Risk warning: military spending growth may be lower than expected, military product installation progress may not meet expectations, and military industry reform may not meet expectations.