AVIC XAC(SZ:000768) Changjiang Securities·2025-08-28 12:43Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a slight decline in revenue but a steady increase in net profit, indicating effective cost control and improved profit margins [3][4]. - The core model Y-20 has significant scarcity in the military trade market, with potential for broader market space for models Y-8/9 and their successors [3][4]. Summary by Sections Revenue and Profitability - In Q2 2025, the company achieved revenue of 10.978 billion yuan, a year-on-year decrease of 7.55%, while net profit attributable to shareholders was 400 million yuan, reflecting a year-on-year growth of 4.02% [3][4]. - For the first half of 2025, total revenue was 19.416 billion yuan, down 4.49% year-on-year, with net profit increasing by 4.83% to 689 million yuan [3][4]. Cost Management - The company reported a sales gross margin of 6.52% in Q2 2025, an increase of 2.16 percentage points year-on-year, alongside a decrease in the expense ratio to 1.8%, down 0.64 percentage points year-on-year [3][4]. Inventory and Contract Liabilities - The inventory balance stood at 21.211 billion yuan in H1 2025, a decrease of 3.96% from the previous quarter, indicating effective inventory management [3][4]. - Contract liabilities decreased from 7.719 billion yuan in Q1 2025 to 5.846 billion yuan in Q2 2025, suggesting ongoing efforts to manage liabilities effectively [3][4]. Market Position and Future Outlook - The company is the sole main manufacturer of a full range of large aircraft in China, with the Y-20 model having a strong demand in the military trade market [3][4]. - The Y-20 competes with the now-discontinued C-17 and the aging IL-76, positioning it favorably in international military trade [3][4]. - Forecasts predict net profits of 1.271 billion yuan, 1.863 billion yuan, and 2.417 billion yuan for 2025, 2026, and 2027 respectively, with growth rates of 24.18%, 46.56%, and 29.77% [3][4].