AVIC (600372): Expansion of Baocheng Instrumentation’s profitability will be further enhanced

Event: The company intends to transfer 100% of the equity of Baocheng Instrument to the related party AVIC Airborne Systems Co., Ltd. through an agreement transfer. At the same time, it will terminate the fundraising project with Baocheng Instrument as the main body and raise the remaining funds of the project to 11,419.

460,000 yuan to permanently supplement working capital.

  The 100% equity of Baocheng Instrument was transferred, and the company’s asset quality was optimized.

Baocheng Instrument is one of the 13 aviation industry projects among the 156 key projects during the “One Five-Year Plan” period. It mainly develops and produces military and civilian products such as military inertial navigation systems, flight safety environmental monitoring systems, textile machinery equipment, military air-conditioning systemsBefore the transfer, AVIC held 100% equity of Baocheng Instrument.

Affected by the downstream market environment of the civilian products business, Baocheng Instrument encountered serious difficulties in operating, and its net profit 四川耍耍网 declined significantly in 2018.

23 trillion, the first three quarters of this year may be 5895.

530,000 yuan, a serious drag on the overall performance of listed companies.

The transfer is conducive to optimizing the asset structure of listed companies and improving the overall profitability of listed companies.

  The domestic avionics industry leader will benefit from military aircraft installations and informatization upgrades.

The company is a leading enterprise in the domestic avionics industry, and its product lineage covers flight control systems, inertial navigation systems, flight attitude systems and other avionics related fields.

The value of avionics system has been significantly improved through inter-generational upgrades of fighter aircraft. The value of avionics systems for third-generation fighters accounts 无锡夜网 for about 30% to 35% of the total aircraft. The mass installation of advanced fighters such as three and a half generations and four generations in China will release a large amount of avionicsEquipment requirements.

In addition, the avionics system of the first generation of military aircraft usually needs to be upgraded for more than three generations. The replacement of the installed military aircraft comes with the peak of the upgrade, and the internal avionics equipment market will grow rapidly.

  As a listing platform for the avionics system of the aviation industry, it helps to benefit from the injection of relevant high-quality assets.

  At the end of 2018, the aviation industry integrated subsidiary resources to establish an airborne company. The existing company was entrusted to manage 5 research institutes and 9 enterprises including 607, 618, and 9 companies of the airborne company.At 100 ppm, the scale far exceeds that of public companies.

With the in-depth reform of the military industry and the integration of the controlling shareholder’s assets, the company, as the sole listing platform for the avionics system of the aviation industry, will benefit from the securitization of related high-quality assets associated with the controlling shareholder.

  Earnings forecast and investment advice: Estimated revenue for 2019-2021 is 85.

84/96.

82/109.

8.9 billion yuan, net profit attributable to mother is 5.

87/6.

98/8.

42 trillion, EPS is 0.

33/0.

40/0.

48 yuan, the current sustainable corresponding PE is 41/34/29 times, maintain “Buy” rating.

  Risk warning: Asset disposal progress is less than expected; military products orders are less than expected.