AECC AEC(SZ:000738) Minsheng Securities·2025-10-29 07:33Investment Rating - The report maintains a "Recommended" rating for the company, indicating a positive outlook based on its long-term growth potential in the aviation engine control sector [4][6]. Core Insights - The company achieved 75% of its annual revenue target in the first three quarters of 2025, with a revenue of 3.968 billion yuan, reflecting a year-over-year decrease of 5.75%. The net profit attributable to shareholders was 401 million yuan, down 36.25% year-over-year [1]. - The third quarter of 2025 continued to show pressure on performance, with a revenue of 1.232 billion yuan, a year-over-year decline of 12.25%, and a net profit of 92 million yuan, down 41.93% year-over-year [1][2]. - The company is facing challenges due to the transition between old and new product models, but it is expected to benefit from the stable growth of the maintenance market and the ramp-up of new model production in the long term [4]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company reported a gross margin of 26.13%, down 3.58 percentage points year-over-year, and a net margin of 10.20%, down 4.82 percentage points year-over-year [1]. - The company’s operating cash flow improved significantly, reaching 673 million yuan compared to a negative 83 million yuan in the same period last year [2]. Business Outlook - The company is expected to maintain a high level of repair business during the 14th Five-Year Plan period, driven by increased demand for repair projects and the ramp-up of production capacity [3]. - The international business is anticipated to grow as domestic high-performance aviation equipment gains traction in foreign markets [3]. Profit Forecast - The company’s projected net profits for 2025 to 2027 are 637 million yuan, 736 million yuan, and 841 million yuan, respectively, with corresponding price-to-earnings ratios of 39x, 34x, and 30x [4][5].