AECC AEC(000738)2024-10-29 07:16Investment Rating - The report maintains a "Recommended" rating for the company, considering its leading position in the aviation engine control system sector and the potential for state-owned enterprise reform [1][3]. Core Views - The company reported a revenue of 4.21 billion yuan for the first three quarters of 2024, representing a year-over-year increase of 2.7%, with a net profit attributable to shareholders of 629 million yuan, up 5.5% year-over-year [1]. - The company is expected to benefit from the stable growth of downstream production and the aftermarket, with projected net profits of 839 million, 1.02 billion, and 1.23 billion yuan for 2024, 2025, and 2026, respectively [1][2]. Financial Performance Summary - For the first three quarters of 2024, the company achieved a gross margin of 29.7% and a net margin of 15.0%, both showing improvements compared to the previous year [1]. - The company’s operating cash flow was negative 83 million yuan, primarily due to increased procurement and tax payments [1]. - The company’s revenue is projected to grow from 5.32 billion yuan in 2023 to 7.86 billion yuan in 2026, with a compound annual growth rate (CAGR) of 14.5% from 2019 to 2023 [2][4]. Profitability and Efficiency Metrics - The company’s net profit margin is expected to improve from 13.65% in 2023 to 15.60% in 2026, indicating enhanced profitability [4]. - The return on assets (ROA) is projected to increase from 4.61% in 2023 to 6.68% in 2026, reflecting better asset utilization [4]. - The company’s total asset turnover ratio is expected to rise from 0.35 in 2023 to 0.44 in 2026, indicating improved operational efficiency [5].