Zhongzhi Co., Ltd. (600038): Pay attention to the opportunity of OEMs in May
I. Investment perspective: In the 2019 annual strategy report “Yanghe Qiqi”, we clearly stated that the OEMs are more likely to grow following the growth of the industry index. The OEMs focus on naval equipment. It is expected that the estimated level of the military industry in 19 years may remain basically stable., Strongly optimistic about the military industry market in the first quarter.
In the first quarter of 2019, ships, information technology, civilian participation in the army performed well, and aviation equipment underperformed the military index.
However, the OEM has entered an adjustment period since April 2019.
We believe that under the good background of China Zhizhi, the current estimated level is below the historical center, and we can focus on the estimated repair opportunities in May.
Second, it is basically targeted: 10-ton general-purpose helicopters may have been delivered in small batches, and it is expected to increase the delivery in 2019; the expansion of the Army Air Force has generated huge demand for military helicopters, and it is expected that the demand gap will be at least 500 in the next three yearsThe high prosperity of the helicopter industry is expected to continue.
The new 10-ton general-purpose helicopter is expected to increase the number of deliveries in 2019, which will be an important performance growth point.
The 10-ton general-purpose helicopter is expected to have a powerful expansion capability compared to the “Black Hawk”, and the GM of the three armed forces has a large space for installation.
The benchmark American Black Hawk accounted for 53% of its military helicopter helicopters. We believe that it is even conservatively expected that more than 600 10-ton general-purpose helicopters will reach more than 600 in the next decade.
According to the 2018 annual report, the revenue and profit of the Zhongzhi Harbin branch (product series include: Straight 9, Straight 19, Y12, EC120, H425, etc.) decreased respectively by 30: 30.
63%. The growth rate of profit exceeds the growth rate of revenue or indicates that the new helicopter products have been delivered in small batches and the gross profit level is relatively high.
We believe that on the basis of small-volume delivery in 2018, 10-ton general-purpose helicopters are expected to increase the number of deliveries in 2019 and will become an important growth point for the company’s future performance.
Multiple financial data verify that the delivery of military helicopters will increase in 2019, and the 19-year performance growth will promote speed.
First of all, the company estimates that the amount of related party transactions with the Aviation Industry Group in 2019 for selling goods and providing services is 190.
75 ppm, with an expected increase in ceiling of 25 per year in 2018.
69%, we believe that the growth of such related transactions is due to the improvement in the delivery of military helicopters in 2019; secondly, the 2018 Jingdezhen branch (product series include: straight 8, straight 10, straight 11, AC series, etc.) Revenue and profit maximization increase 西安耍耍网 each year: 0.
43%, we think the first is the stable delivery of the straight 10 model, the straight 8 improved model has not yet been delivered in large quantities.
The straight 8 improved type is also expected to increase the delivery volume and bring performance increase in 2019. Finally, the first quarter of 2019, the contract debt ceiling in the previous period increased the advance receipts (16.
7.2 billion, +44.
28%), indicating an increase in order volume; prepayments for the first quarter of 2019 increased by 38 per year.
92%, mainly due to the increase in production and procurement.
To sum up the above three aspects, we think that the delivery volume of military helicopters is expected to increase this year, and the growth of performance will promote the acceleration.
The Army Air Force expansion 合肥夜网 has given rise to huge demand for conventional military helicopters. It is expected that the demand gap will be at least 500 in the next three years.
Army aviation is an important branch of our army in building “three-dimensional defense”.
Our army’s Army Aviation unit was accurately expanded in the military reform launched at the end of 2015. At present, our Army’s 13 Army Aviation Brigade + 2 Air Sudden Brigade have been completely reformed (this round of army reform has formed 3 Army Aviation Brigade).
According to reports, according to data from CCTV News and the James Dunhuang Foundation of the United States, in the future, some Army will deploy and develop 15 Army brigades (13 Group Army + Tibet / Xinjiang 2 military districts) and 5 Air Sudden Brigades (5 major war zones),The number of helicopters required by each Army Aviation Brigade and Air Brigade is 100 and 72. In the future, the Army will need about 1,860 military helicopters.
In the next three years, only three newly formed Army Aviation brigades will be considered to be equipped with 70 helicopters per brigade (consideration during the formation process is not up to full capacity), and the existing 13 Army Aviation brigades and two Air Force brigades will each have 70 helicopters.According to the calculation of 20 helicopters replaced by each brigade, at least only 500 helicopters are needed for Army helicopters.
In addition, 075 helicopter carriers, 055 and 052D destroyers will drive demand for naval helicopters.
As the only listing platform of the China Aviation Industry Corporation’s helicopter sector, Zhongzhi will fully benefit from the development of military helicopters.
III. Investment suggestion: In the context of the expansion of the Army Air Force and the deployment of 075 helicopter carriers and other ships, there is a huge demand for domestic military helicopters; and a new generation of 10-ton general-purpose helicopters will be put into production or the delivery will be increased in 2019We believe that the operating fundamentals of Zhongzhi shares continue to improve, and the company’s operating performance growth in 2019 may have improved.
We expect net profit for 2019-2021 to be 6, respectively.
41 trillion, EPS is 1.
60 yuan, corresponding to the current sustainable PE is 36X, 29X, 25X.Zhongzhi shares have entered an adjustment period since April 2019.
We believe that under the good background, the current estimated level is below the historical center, and we can focus on the opportunity for recovery in May.
4. Risk warning: The reduction of key components affects the delivery progress and procurement scale; the construction speed of Army Aviation is not up to expectations.