AVIC Mechanical & Electrical (002013) 2018 Annual Report Commentary: Steady Growth of Military Products Industry Optimistic about the Company’s Development Prospects

AVIC Mechanical & Electrical (002013) 2018 Annual Report Commentary: Steady Growth of Military Products Industry Optimistic about the Company’s Development Prospects

Event AVIC Mechanical and Electrical released the 2018 annual report, and the company actually realized operating income of 116.

37 ppm, an increase of 4 per year.

08%; realize net profit attributable to shareholders of listed companies.

37 ppm, an increase of 16 in ten years.

49%; basic return is 0.

23 yuan / share, an increase of 15 in ten years.

00%.
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The main business of aviation has maintained steady growth and is optimistic about the company’s long-term development prospects. The company will achieve operating income of 116 in 2018.

37 ppm, an increase of 4 per year.

08%, 105 of the annual plan completed.

79%.

Military aviation and defense initially achieved income 72.

83 ppm, a ten-year increase of 8.

The growth rate is 17%, far exceeding that of the civilian products business. It is expected that the fundamentals of the military industry will continue to improve, and the military products business will still maintain rapid growth.

Revenue from industrial manufacturing business decreased by 0% year-on-year.

83% to 38.

61 million, is expected to remain stable overall.

Civil aviation revenues fall by 9 per year.

66% to 3.

5 billion, through the continuous promotion of civil models such as C919, AG600, MA700, the civil aviation market has a broad space.

Financial expenses decreased significantly, and the amount of receivables increased by 32.

78% 2018 selling expenses1.

93 ppm, overhead costs11.

7.4 billion, an increase of 5 each year.

67%, 9.

00%, basically in line with the company’s business growth; financial expenses 2.

12 ppm, a decrease of 20 per year.

42% of the company’s convertible bonds was issued in 2018, effectively improving the company’s capital structure and reducing financial costs.

Ending accounts receivable 67.

7.6 billion, an annual increase of 32.

78%, related to the company’s increase in product delivery speed; inventory reached 41.

48 ppm, an increase of 3 per year.

86%, due to the company’s increase in raw material procurement for production and increase in work in progress.

The aviation electromechanical system listing platform may benefit from asset injection in the future. The company currently trusts 7 companies and 1 public institution (609). As the domestic electromechanical system listing platform of the Aviation Industry Group, the company will fully enjoy the military civilian electromechanical system trillionUS dollar market space, the reform of scientific research institutes, and the implementation of mixed reforms may benefit from asset injection expectations in the future.

Profit forecast We expect the company’s operating income to be 125 in 2019-2021.

68, 134.

48, 138.

510,000 yuan, the net profit attributable to shareholders of the parent company was 10.29, 11.

39, 12.

310,000 yuan, the corresponding EPS is 0.

29, 0.

32, 0.

34 yuan, corresponding to PE is 25, 23, 21 times, maintaining the “overweight” level.

Risk warning: military orders are less than expected, and automotive business development is less than expected.