Hangfa Power (600893) Annual Report Comments: Significant Improvement in Costs During the Period, Gross Margin Deviations Slowed Performance Release

Hangfa Power (600893) Annual Report Comments: Significant Improvement in Costs During the Period, Gross Margin Deviations Slowed Performance Release
Leading domestic aero-engine companies have continued to improve their operations. Maintaining a “Buy” rating. Aero-Power is the only domestic company that manufactures a full range of military aero-engines, and plays an important role in the development of military aviation equipment and large aircraft industries.Due to the decrease in the overall gross profit margin due to the adjustment of the main business structure, the company’s 2018 performance was lower than expected.Pioneer Corporation achieved operating income of 231.02 ppm, a ten-year increase of 2.43%, net profit attributable to mother 10.64 ppm, an increase of 10 in ten years.82%.However, the company’s overall operations continue to improve, and we expect EPS to be 0 in 2019-2021.50, 0.58 and 0.At 67 yuan, at the same time, there is room for improvement in the subsequent benefits of military industry reform and other factors, and we maintain a “buy” rating. During the period, the costs have improved significantly, and the gross profit transition has dragged down the performance and released the company’s 2018 sales expenses2.14 ‰, a decrease of 15 per year.52%; administrative expenses 17.46 ‰, a decrease of 8 per year.14%, down 1.5.3 billion; thanks to the reduction in the overall debt rate after the implementation of the 2017 fixed increase, financial 北京夜网 expenses21 ppm, a previous substantial reduction of 42.90%, down 3.16 ppm; budget company R & D expenses4.43 ppm, an increase of ten years6.69%.Due to the 2018 operating income composition, the military product business and research sales revenue increased, but the repair business with a higher gross profit margin declined, and the company’s core business, aero engine manufacturing and derivative products, gross profit margin18.36%, compared with the same period last year 1.97 averages constitute a drag on performance release. Profit after deductions increased rapidly, operating cash flow performed well, and operations continued to improve. In 2018, the company achieved net profit after deductions to non-parents7.190,000 yuan, an increase of 36 ten years ago.83%, indicating a significant improvement in business operations.The company’s net cash flow from operating activities in 2018 was 12.10 ppm, an increase of 24 in ten years.39%, continuous improvement of operating cash flow, gradually increasing the relief of the company’s compensation pressure and lower financial costs. National defense equipment installation and military-civilian integration development are the driving forces for performance. It is expected to benefit from military pricing reform. The company is the only domestic domestic supplier of three-generation main-model military turbofan engines, and it is in a leading position in the domestic aviation engine industry.We believe that in the last two years of the 13th Five-Year Plan, national defense construction will begin to accelerate. Accelerating the installation of downstream supporting national defense equipment and continuous advancement of domestic substitution of aero engines will constitute the company’s main business support.At the same time, through the development of the domestic large aircraft industry and the continuous advancement of the two aircraft special projects, domestic commercial aviation engines have begun to accelerate their catch-up with international advanced levels. As the leader of the asset industry of major domestic aviation engine operating companies, the company has a bright future for the core supporting business of domestic commercial aviation development.In addition, the company, as an aero engine main unit, is expected to benefit from military pricing reforms and significantly improve asset profitability. The leader of domestic aviation development, directly benefiting from equipment installation and military-civilian integration development, maintaining the “Buy” rating. According to the 2019 business plan disclosed in the company’s 2018 annual report, we expect the company’s operating income for 2019-2021 to be 244.2.3 billion, 261.04 ppm and 280.08 million yuan, the net profit attributable to the mother was 11.3.6 billion, 13.06 ppm and 15.100,000 yuan (19/20 before the adjustment was 14).82/17.93 ppm), the corresponding EPS is 0.50, 0.58 and 0.67 yuan (19/20 before adjustment is 0.66/0.80 yuan).We are optimistic about the company’s outstanding industrial level and influence on industrial development, and there is ample room for growth in the future. Risk reminder: National military expenditures fall short of expectations, new products are not delivered as expected, and the progress of military pricing reform is not up to expectations.