AVIC (600372): Stripping Baocheng Instrument to Improve Asset Quality

AVIC (600372): Stripping Baocheng Instrument to Improve Asset Quality

Recently, the company issued an announcement intending to transfer its holding of Shaanxi Baocheng Aviation Instrument Company to AVIC Airborne System 武汉夜生活网 Co., Ltd. by way of agreement transfer.

  A brief comment on the main business of Baocheng Instrumentation is the aerial attitude system and car navigation. Because the product structure cannot meet the new requirements, Baocheng Instrumentation can be continuously replaced. In the first three quarters of 2019, Baocheng Instrumentation’s military products revenue2.

60,000 yuan, profit maximizing 68.84 million yuan, 2018 revenue4.

10,000 yuan, the cumulative profit budget is 44.05 million yuan.

In order to protect the interests of small and medium investors, further optimize the company’s internal asset structure, and improve the efficiency of the company’s asset operations, the company intends to transfer Baocheng Instruments to AVIC Airborne Systems through an agreement transfer method.

  The divestment of Baocheng Instrument 北京夜网 will increase the company’s profits.

According to simulation calculations in the first three quarters of 2019, the sale of Baocheng Instruments will increase the net profit of AVIC attributable to mothers by 5686 in the first three quarters.

86 million yuan.

  Hosted airborne companies may have some injection expectations.

The company and the airborne company signed the “Custody Agreement” to host its 14 companies and institutions, which is conducive to strengthening the integration of the airborne sector, accelerating the integration of aircraft and industrial aircraft and electricity, and promoting the professional development of the company’s avionics products, and further deepeningThe reform of the system and mechanism has improved the company’s management efficiency. AVIC Electronics has been added as a listed company in the avionics system. In the future, it is expected to inject trusteeship companies and increase company performance.

  The company’s initial stock repurchase plan demonstrates confidence and promotes long-term stable development.

  The company disclosed on January 31, 2019 that it intends to use its own funds and self-raised funds to repurchase the company’s shares in a centralized bidding transaction, and the total amount of repurchased shares is not less than 1.

50,000 yuan and not more than 300 million yuan, the repurchase price does not exceed 18.

50 yuan / share. The repurchased shares will be used for employee equity incentive plans and conversion of convertible bonds.

The company’s stock repurchase plan reflects the company’s confidence in future development, and also reflects that it is believed to gradually surpass the company’s true value, which is conducive to enhancing market confidence and promoting the company’s long-term stable development.

As of the end of 2019, the company has repurchased1.

500 million.

  The military-civilian market has huge potential and stable and high performance. The company is expected to be a leading domestic avionics system company. The military and civil aviation market is broad, and policy support helps the development of airborne system technology. Managed airborne companies and stock repurchasing are expected to enhance the market.Confidence is conducive to the company’s long-term stable development.

We are optimistic about the company’s future development prospects and predict that the company’s net profit attributable to mothers from 2019 to 2021 will be 6 respectively.

5.4 billion, 7.

8 million yuan, 7.

79 ppm, an increase of 36 per year.

42%, 8.

22%, 10.

08%, the corresponding 19 to 21 years EPS are 0.

37, 0.

40, 0.

44 yuan, corresponding to the current expected PE of 40.

78, 37.

68, 34.

23 times, maintain BUY rating.