Summary of AVIC Jonhon (002179.SZ) Conference Call Company Overview - **Company**: AVIC Jonhon (002179.SZ) - **Industry**: Aerospace & Defense (A&D) and Industrial Technology Key Points Growth Outlook - **A&D Revenue Growth**: Forecasted at 16% CAGR from 2024 to 2030, driven by national defense spending and civil aviation opportunities [17][46] - **Liquid Cooling Revenue**: Expected to grow at 21% CAGR from 2024 to 2030, contributing 10% to total revenue by 2030 [24][46] - **Net Income Growth**: Projected to have a CAGR of 19% from 2024 to 2030, supported by A&D growth and liquid cooling contributions [16][36] Financial Performance - **Revenue Projections**: - 2024: Rmb 20,685.5 million - 2025E: Rmb 25,026.4 million - 2026E: Rmb 28,414.7 million - 2027E: Rmb 32,319.1 million [4][13] - **Gross Profit Margin (GPM)**: Expected to improve in 2Q25E after a decline in 1Q25, driven by a higher defense business mix [30][31] - **Net Profit Margin (NPM)**: Projected to reach 18.8% by 2030, up from 16.2% in 2024 [30] Valuation and Investment Thesis - **Target Price**: Rmb 46.10, implying an 18.6% upside from the current price of Rmb 38.87 [1][37] - **P/E Ratio**: Currently trading at 20x 12-month forward P/E, below historical average of 28x [2][39] - **Investment Rating**: Upgraded to Buy from Neutral due to solid growth outlook and attractive valuation [1][37] Risks - **A&D Spending Risks**: Potential slower-than-expected A&D spending could impact revenue forecasts [2][45] - **Pricing Pressure**: Rising pricing pressure in the A&D supply chain may adversely affect earnings [2][45] - **Competition**: Increased competition from domestic and global connector makers could impact market share and margins [2][45] Additional Insights - **Domestic Defense Spending**: Expected to grow at 7% CAGR from 2025E to 2030E, aligning with China's military modernization strategy [17][20] - **Civil Aircraft Opportunities**: Limited current contribution from civil aircraft but potential growth from the C919 aircraft backlog [18][22] - **Liquid Cooling Market**: Currently low penetration compared to air cooling, with a target of 20%-25% revenue contribution in the long term [24][46] Financial Metrics - **EBITDA Growth**: Projected to grow from Rmb 3,825.4 million in 2024 to Rmb 6,302.5 million by 2027 [4][13] - **Dividend Payout Ratio**: Expected to remain stable at around 50% [43] This summary encapsulates the key insights from the conference call regarding AVIC Jonhon's growth prospects, financial performance, valuation, risks, and additional insights into the industry landscape.