Aerospace Electric (002025): Third-quarter results are slightly lower than expected, optimistic about Q4 and long-term performance

Aerospace Electric (002025): Third-quarter results are slightly lower than expected, optimistic about Q4 and long-term performance
Event: The company released the 2019 third quarter report: reporting a series of realized operating income25.12 ppm, an increase of 28 in ten years.11%; realized net profit attributable to mother 2.97 ppm, an increase of 11 years.34%.  Operating income has grown rapidly and profit growth has improved.(1) Revenue of Q3 2019 25.120,000 yuan (+28.11%), net profit attributable to mother 2.9.7 billion (+11.34%), benefiting from the steady increase in military income and the consolidation of Guangdong Huajing, the revenue in the first three 北京桑拿洗浴保健 quarters increased rapidly.Reported gross sales margin was 36.77%, a decrease of 2 over the same period last year.42pct, it is expected that: ① the proportion of income of civilian products with relatively high profitability will increase; ② the prices of raw materials such as precious metals and special chemical materials will rise.(2) Third quarter revenue 8.9.3 billion (+12.68%), net profit attributable to mother 1.0.9 million yuan (+0.(09%), profit growth rate is lower than expected revenue growth, and mainly include: ① management expenses, research and development expenses and other expenses increased, period expenses increased by 40% compared with the third quarter of last year; ② minority shareholders’ equity increased by 223%, Increase 659.10,000 yuan.The company’s revenue focus is obvious. It is expected that the fourth 无锡桑拿网 quarter results will grow rapidly, and the results are expected to remain stable.  Inventories and prepayments indicate that the order is full, and performance growth is expected to continue.Surplus of inventory at the end of the reporting period 5.2 billion (+40.60%), reflected in better hand orders, and is moderately increasing the material reserves required for production.Prepayment balance 8814.240,000 yuan (+39.14%), the increase in prepayments for the procurement of Guizhou Linquan Materials, a subsidiary, increased.In addition, monetary funds at the end of the reporting period decreased by 63 from the beginning of the year.64%. In addition to the increase in operating capital due to the increase in operating scale, the increase in procurement of materials required for order production, outsourcing of subcontracting materials and parts and components is also one of them.The main forward-looking indicators of the balance sheet show that the company has ample orders in hand and its future performance is expected to grow steadily.  The continuous development of military and civilian business will continue to benefit from the high prosperity of the military, 5G and other markets.The company’s connectors and micro-motor products cover aerospace, aviation, electronics and other military sub-sectors, with revenue accounting for more than 70%. It is expected to continue to benefit from the high-density launch of space and the rapid deployment of weapons and equipment.The company actively develops civilian products such as optical communication devices and cable assemblies. The newly established Guangdong Huajing has been consolidated in March this year. In the future, the civilian market such as 5G communications is expected to further develop the company’s development space.  Profit forecast and investment suggestions: It is estimated that the company’s revenue in 2019-2021 will be 35.03/42.78/51.4 billion, net profit attributable to mothers is 4 respectively.29/5.14/6.11 trillion, EPS is 1.00/1.20/1.42 yuan, the current expected corresponding PE is 25/21/18 times, maintain “Buy” rating.  Risk warning: military product orders are less than expected; civilian product development is less than expected.