Avic Hi-Tech(SH:600862) Southwest Securities·2024-08-29 01:11Investment Rating - The report assigns a "Buy" rating for the company with a target price of 22.41 CNY over the next six months [1][7]. Core Insights - The company has shown steady growth, with a 5.6% year-on-year increase in revenue to 2.547 billion CNY and a 9.5% increase in net profit to 600 million CNY in the first half of 2024, aligning with expectations [2]. - The aerospace new materials business has experienced a 6.1% increase in revenue, reaching 2.52 billion CNY, and a 10.3% increase in net profit to 630 million CNY [2]. - The company maintains a strong position in the industry, being a leading supplier of prepreg materials for the aviation industry, backed by the Aviation Industry Corporation of China [2][10]. Summary by Sections Financial Performance - In H1 2024, the company achieved a gross margin of 37.3%, with a net profit margin increase of 0.8 percentage points to 23.7% [2]. - The company’s revenue and profit targets for 2024 are set at 5 billion CNY and 1.282 billion CNY, respectively, reflecting a year-on-year growth of 4.6% and 5.7% [18]. Business Segments - The aerospace new materials segment is the primary revenue driver, contributing 94.3% of total revenue in H1 2024 [12]. - The company has established a joint venture with China Aviation Engine Corporation to develop composite materials for aircraft engines, indicating a strategic expansion into high-potential areas [3][13]. Market Outlook - The demand for composite materials in military aircraft is expected to rise as the usage rate of composites in new generation military aircraft increases [21]. - The C919 aircraft program is projected to significantly boost domestic demand for composite materials, with an estimated annual requirement of 430 tons as production ramps up [30][34]. Earnings Forecast - The company forecasts EPS of 0.83 CNY, 0.97 CNY, and 1.13 CNY for 2024, 2025, and 2026, respectively, with corresponding dynamic PE ratios of 22x, 19x, and 16x [7][40]. - The expected revenue growth rates for 2024-2026 are 7.8%, 19.4%, and 19.5%, respectively, driven by the aerospace new materials segment [40].