AVIC SAC(SH:600760) Guoyuan Securities·2025-09-08 08:45Investment Rating - The report maintains a "Buy" rating for the company, indicating an expectation of stock price appreciation exceeding 15% relative to the benchmark index [5]. Core Views - The company's performance in the first half of 2025 showed a decline in revenue and net profit, with revenue at 14.628 billion yuan, down 32.35% year-on-year, and net profit at 1.136 billion yuan, down 29.78% year-on-year. This decline is attributed to a slowdown in the delivery schedule of certain defense equipment and a shift towards high-end models, which has lengthened production and delivery cycles. Despite the downturn, the overall performance aligns with market expectations, and the net profit margin remains stable at around 7.7% [1][2][3]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved a gross margin of 12.25%, a slight decrease of 0.28 percentage points year-on-year, while the net profit margin improved compared to the previous year, reflecting effective cost control and expense optimization. The second quarter of 2025 saw a revenue of 8.79 billion yuan, down 27.5% year-on-year, with a net profit of 710 million yuan, down 21.8% year-on-year, but showing a recovery compared to the first quarter [2][3]. Strategic Developments - The company is intensifying its focus on new fighter jets and advanced materials. The J-35A stealth fighter was showcased at the Paris Air Show, indicating the company's leading position in next-generation fighter development. Additionally, the establishment of composite materials and titanium alloy production lines is progressing, laying the foundation for future mass deliveries of stealth fighters. The company also launched a high-cargo drone project, expanding into military-civilian integration [3][4]. Order and Contract Status - The company has seen a significant increase in contract liabilities, which rose to 7.532 billion yuan, up 113.47% from the beginning of the year, indicating a robust backlog of pre-received orders and ample future revenue recognition potential. Accounts receivable decreased by 6.1% to 18.64 billion yuan, showing improved collection efficiency, while inventory decreased by 15.3% to 11.515 billion yuan, reflecting effective inventory reduction efforts [4][5]. Market Position - As a key player in China's defense aviation sector, the company maintains a core position in the national defense system. The J-16 series has become a mainstay for the air force, with sustained high demand. The company is also a significant supplier for the C919 project and is involved in various commercial aircraft models, indicating long-term growth potential in the civil aviation market [5][6]. Profitability Forecast - The company is expected to achieve net profits of 3.787 billion yuan, 4.234 billion yuan, and 4.852 billion yuan for the years 2025, 2026, and 2027, respectively, with corresponding price-to-earnings ratios of 30.78, 27.53, and 24.03. The outlook is supported by a strong order reserve, advancements in manufacturing systems, and the gradual realization of new productive capacities [7][9].