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Aerospace Appliance (002025): Industry boom in military industry, 5G development potential

Aerospace Appliance (002025): Industry boom in military industry, 5G development potential
Military products, civilian products, and the international market have blossomed in multiple points, and the performance is in line with expectations. The company released the semi-annual report for 2019 and achieved operating income16.190,000 yuan, an increase of 38 in ten years.56%; net profit attributable to mothers1.870,000 yuan, an increase of 19 in ten years.17%; gross margin is 35%, increasing by 6 units per year.Revenue growth is mainly due to 1) the company’s expansion of product promotion, production capacity enhancement, military and civilian product orders have achieved rapid growth, and the international market has gradually exceeded 100 million yuan; 2) Guangdong Huajing consolidated since March, and realized revenue from March to June77.77 million yuan, net profit can increase 5.54 million yuan.The increase in gross profit margin was mainly due to the increase 杭州夜网 in prices of precious metals and special chemical materials, as well as the increase in the proportion of income from civilian products.We expect EPS to be 1 in 2019-2021.01, 1.20 and 1.44 yuan / share.Maintain “Buy” rating. Connector and relay business: Military products continue to benefit from the installation of new equipment, and civilian products open up growth space. In the first half of 2019, the connector business achieved revenue9.94 ‰, an increase of 58% in ten years, and a gross profit margin of 37%, which will be extended for 8 quarters.Revenue from the relay business1.USD 3.6 billion, an annual growth of 37%, a gross profit margin of 49%, each extension of 11 quarters; the two major businesses together account for about 70% of revenue, and can increase up to 9 alternatives.We believe that the rapid growth of the 杭州桑拿网 two major businesses is the continuous growth of the company’s overall performance and development on the basis: military products have obvious advantages in the aerospace field, and they are expected to benefit from the short-term benefits of military reform to eliminate the need for replacement orders and practical training to strengthen demand;Look, the land, sea, air and space power covers the whole field, and it is expected to take the lead in benefiting from a new round of accelerated equipment installation, aerospace launch and national defense informatization. In civil, 5G communications, new energy vehicles and other fields are gradually opening up. Micro special motor and optical device business: New technology, new product reserves are abundant, business development flexibility is large In the first half of 2019, the motor business achieved revenue4.31 ‰, with a growth rate of 15% in ten years, a gross profit margin of 27%, and an annual increase of 3%.Optical device business achieved zero revenue.40 ‰, a 10-year average of 9%, a gross profit margin of 13%, an increase of at least 11 percentage points.The company continues to increase investment in research and development of new technologies such as optoelectronics, high-speed and interconnection, integrated chassis and precision micro special motors, and new products.We are optimistic that military micro special motors are installed in large-scale combat platforms such as precision guidance, unmanned aerial vehicles, and unmanned boats, as well as the intelligent installation of traditional weapons and equipment. Guizhou Linquan, as a leader in precision micro special motors, is expected to welcomeGreat historical potential. Vigorously promote the intelligent manufacturing industry, steadily improve the automation capability, and continuously improve the supply chain management. In the first half of 2019, the company fully launched the transformation of the production line of contact parts and the production data collection system for relay assembly. It continued to optimize the supply chain management process and work requirements and achieved results.Significant improvement and reduced management expense ratio2.For eight units, the sales expense ratio decreased by one each quarter.2 units. We are optimistic about the company’s subsequent order growth and maintain a “Buy” rating. Taking into account Guangdong Huajing’s consolidation, military and telecommunications downstream boom, we have raised its operating income for 2019-2021 to 34, respectively.94, 42.34 and 50.8.2 billion (previous values were 32.67, 39.58 and 48.69ppm, increase by 7%, 7% and 4%); Considering the increase in raw material prices and the increase in the proportion of civilian products, the net profit attributable to the mother is reduced to 4, respectively.33, 5.16 and 6.1.7 billion (previous value was 4 respectively.42,5.32 and 6.3.3 billion yuan, down 2%, 3% and 3%).According to Wind ‘s unanimous expectation, the average valuation of comparable A shares is expected to be 36 times in 19 years, giving the company an estimated PE of 33-36X in 2019 and adjusting the target price to 33.33-36.36 yuan / share.Maintain “Buy” rating. Risk Warning: The increase in military spending exceeds expectations, and increased competition exacerbates risks.