Airfare Control (000738) Company comment: The small growth in the first three quarters of the company continued to benefit from the two-machine special project

Airfare Control (000738) Company comment: The small growth in the first three quarters of the company continued to benefit from the “two-machine special project”
Event: The company announced the third quarter report of 2019, and achieved operating income of 20 in the first three quarters.800 million, an increase of 11 every year.33%, net profit attributable to mothers2.52 ppm, a ten-year increase of 8.14%, the corresponding return is 0.22 yuan. Comments: (1) The company’s operating income in the first three quarters increased by 11.33%, of which Q3 achieved 7.09 million yuan, an increase of 21 in ten years.93%, first of all, the company’s core business aero engine control system revenue increased; (2) the company’s first three quarters increased net profit attributable to mother.14%, of which Q3 achieved 0.73 ppm, an increase of 10 in ten years.67%.The growth rate of net profit attributable to mothers is slightly lower than the growth rate of revenue mainly including: 91%, mainly due to the increase in packaging costs, sales service fees, exhibition costs, etc .; b) R & D expenses increased by 32 in the third quarter.82%; c) 杭州夜网论坛 reported that the progressive operating costs increase by 18.15%; (3) The company’s management expenses decreased by 10 in the first three quarters.67%; other gains increase by 331 per year.82%, mainly due to the increase in government subsidy income; (4) in terms of assets and liabilities, a) the company’s accounts receivable at the end of the period increased by 66 compared with the beginning of the period.81%, which was mainly due to the fact that the accounts receivable had not been restored; b) the end of other payables of the company increased by 132 compared with the beginning of the period.09%, mainly due to temporary storage of the project and unpaid social security, the increase in accrued expenses.(5) In terms of cash flow, a) the company’s net operating cash flow increased by 122.97%, mainly due to an increase of 291.36 million yuan in sales income each year, and an increase of 111 million yuan in cash received from other operating activities; b) the company’s net financing cash flow increased by more than 502.82%, which was mainly due to a net increase in borrowings of 86.30 million yuan and an increase of 40.61 million yuan in special funds received. The main business of aeronautical control is at the forefront, with armament / two-machine special two-wheel drive.The company’s main product is an aero engine control system, which leads the country in terms of technology and market. It has close cooperation with major domestic aviation engine manufacturers and is a core system supplier for aviation in developing countries.With the deployment of our military’s future new military aircraft (fighter aircraft J20, transport aircraft Y20, helicopters, carrier-based aircraft, etc.), the demand for military engines will continue to grow, and the company’s main business is engine core system components, so future performance growth will benefit from military aircraftListed.At the same time, the two-machine special project (scale of 100 billion yuan) has been implemented in advance. The company is a core member of the gradual aviation development system and has been funded in the subsequent product development. Develop the civil aviation auxiliary industry and enter the global civil aircraft industry chain.The company provides subcontracting production of precision parts for manufacturers in the global civil aircraft industry, focusing on the manufacturing of aviation subcontracting parts, expanding the international joint development model, and striving to develop into a new model.At present, the company has established a long-term stable cooperative relationship with internationally renowned manufacturers, and has steadily entered the global civil aircraft manufacturing industry chain.In the future, domestic commercial aircraft will gradually enter the commercial operation stage, which will help the company to further expand the market. Investment suggestion: Considering that the company’s aero engine control system has obvious competitive advantages, it will benefit from military engine installation in the long run. We predict that the company’s EPS in 2019/20/21 will be 0.25/0.28/0.33 yuan, corresponding to 55/51/42 times the PE, covering for the first time, giving the company an “overweight” rating. Risk reminder: The military engine installation progress is slow, and the prosperity of the international civil aviation manufacturing market is down.