AVIC SAC(SH:600760)2024-05-08 07:02Investment Rating - The report maintains a "Buy" rating for the company [2][9]. Core Views - The company is positioned for steady growth through a three-phase development strategy, with a focus on multi-product offerings and a robust pipeline of new products [2][10]. - The company is expected to benefit from both domestic demand and foreign trade opportunities, with significant market potential in military and civilian aviation sectors [2][10]. - The report highlights four key growth drivers: increasing domestic military aircraft demand, substantial foreign trade opportunities for the FC-31, a growing maintenance business, and a strong order backlog for the C919 aircraft [2][10]. Summary by Sections 1. Company Overview - The company is a core state-owned enterprise in China's defense aviation sector, focusing on a full-cycle integration of research, manufacturing, and maintenance [20][24]. - It has undergone significant restructuring since 2017, enhancing its capabilities and market position [20][24]. 2. Three-Phase Development Review - Phase 1 (2017-2020): The company established a solid foundation post-restructuring, focusing on military aircraft manufacturing, with rapid revenue and profit growth [31][33]. - Phase 2 (2021-2023): The company experienced stable growth driven by increased demand for naval and air force products, with a compound annual growth rate (CAGR) of 16.43% in revenue [39][41]. - Phase 3 (2023-Present): The introduction of fourth-generation aircraft is expected to enhance operational capabilities, with the company entering a more integrated development phase [49][50]. 3. Key Growth Drivers - Domestic Demand: The development of China's aircraft carrier fleet is expected to drive demand for new naval aircraft, creating a market space worth hundreds of billions [2][10]. - Foreign Trade: The FC-31 is anticipated to open up a foreign trade market potentially worth tens of billions, especially with increasing international interest [2][10]. - Maintenance Services: The acquisition of a maintenance company is expected to bolster revenue from aircraft servicing as existing products reach their maintenance cycles [2][10]. - C919 Aircraft Orders: The company is positioned to benefit from a robust order backlog for the C919, with a projected market size of nearly $90 billion over the next 20 years [2][10]. 4. Future Outlook - The company is expected to see steady growth in profitability supported by production efficiency improvements and a favorable pricing mechanism in the military sector [2][10]. - The report projects net profits for 2024-2026 to be 38.2 billion, 50.1 billion, and 66.1 billion respectively, reflecting a strong growth trajectory [2][9].