AVICHM(SH:600765) Xinda Securities·2024-04-09 16:00Investment Rating - The investment rating for AVIC Heavy Machinery is "Buy" with a previous rating of "Buy" as well [1]. Core Views - The company is expected to achieve a revenue of 2.648 billion yuan in Q1 2024, representing a 13% increase, and a net profit attributable to shareholders of 319 million yuan, which is an 18% increase. The net profit excluding non-recurring items is projected to be 290 million yuan, reflecting an 8% increase [1]. - The company is positioned for high growth and low valuation in the aerospace forging sector, with expectations for accelerated growth in 2024 as high-end production capacity is gradually released. The year 2023 is viewed as a strategic transformation year for the company [1]. - The report highlights that the military industry is expected to recover in 2024, benefiting the company as new models enter mass production. The company is also enhancing its market share in high-end equipment [1]. - The demand for commercial aircraft and foreign trade is robust, with significant growth in the forging market anticipated, driven by the C919 aircraft entering mass production [1]. - Profit forecasts indicate that the net profit attributable to shareholders is expected to reach 1.677 billion yuan, 2.170 billion yuan, and 2.705 billion yuan for the years 2024, 2025, and 2026 respectively, with a compound annual growth rate (CAGR) of 27% [1]. Summary by Sections Financial Performance - In Q1 2024, the company reported a revenue of 2.648 billion yuan, up 13% year-on-year, and a net profit of 319 million yuan, up 18% year-on-year. The foreign trade revenue reached 264 million yuan, marking a 96.42% increase year-on-year and a 25.89% increase quarter-on-quarter [1]. - The company’s revenue for 2023 was 10.577 billion yuan, with a slight increase of 0.1% compared to 2022. The net profit for 2023 was 1.329 billion yuan, reflecting an 11% increase [2][5]. Market Outlook - The aerospace forging market is entering a golden development period, with the military aircraft forging market expected to reach 1,593 billion yuan by 2031, and the commercial aircraft forging market projected to exceed 2,500 billion yuan [1]. - The report anticipates that the market will concentrate towards leading companies, with AVIC Heavy Machinery's subsidiaries positioned as leaders in various forging sectors [1]. - The company is expected to benefit significantly from the acceleration of domestic large aircraft production, with plans for the C919 to reach an annual production capacity of 150 units in the next five years [1]. Strategic Developments - The company is actively expanding its production capacity and enhancing its competitive edge through acquisitions and technological advancements, including the acquisition of an 80% stake in Hongshan Forging and investments in advanced forging facilities [1]. - The integration of the supply chain is being prioritized, with efforts to enhance collaboration with major international players such as Boeing and Airbus, leading to a significant increase in foreign trade orders and revenue [1].