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Hangxin Technology: Aviation maintenance and mergers and acquisitions, equipment development and frequent reports


Layout of aviation maintenance industry chain, ATE, HUMS drive equipment development to ensure rapid growth
The company is a leading company in the third-party aviation maintenance business in China, and completed the merger and acquisition of MMRO to accelerate the layout of the entire industrial chain of aviation maintenance. At the same time, the company's airborne equipment, ATE and other areas of technical capabilities are outstanding, ATE, HUMS and other products are expected to enter the final stage of installation, becoming the company's main endogenous growth point. We expect the company's EPS of 2018-2020 to be 0.56 yuan, 0.88 yuan and 1.19 yuan respectively. According to the comparable valuation method, the current stock price is at a lower position in the industry's year-on-year valuation. It is recommended to "buy". 
Domestic third-party aviation maintenance leader, MMRO mergers and acquisitions to improve the industrial layout
The company's maintenance capability covers more than 40 kinds of civil aviation, more than 30 kinds of military and navigation aircraft, including more than 2,500 airborne parts and accessories, with a total of more than 24,000 parts of the third-level maintenance capability. It is the leading third-party aviation maintenance enterprise in China. After the completion of the MMRO merger and acquisition, the company quickly cut into the European aircraft base maintenance and aviation asset management related segments, further comprehensively laid out the aviation support business, and accelerated the international development. We believe that the downstream domestic aviation maintenance market will warm up, MMRO performance and the company's international business will effectively stimulate the company's aviation maintenance business to grow rapidly and steadily.
Development of the downstream military helicopter industry, driving the amount of airborne equipment such as flying ginseng and HUMS
The company has outstanding technical capabilities in the development of airborne equipment and is the general division of the general flight parameter recording system. In 2017, the company's airborne equipment research and development achieved a number of breakthroughs. A model of small-scale flight parameters has been successfully developed and installed for trial use. Many models of helicopter vibration monitoring and health diagnosis systems have been certified and installed for trial use. It is expected to enter the harvest period in 2018. We believe that as the defense equipment such as downstream military helicopters gradually enters the batch production period, the company's airborne equipment products such as flying ginseng and HUMS will be expected to contribute major business increments.
Automated Test Equipment (ATE) has outstanding technical capabilities, broad market prospects, and scarce standards
The company is one of the few companies in China with ATE R&D and large-scale production capacity of airborne equipment, and disclosed that it is undertaking the development task of a military multi-machine test equipment. The company is researching and implementing the next-generation test system, aiming to meet the requirements of internal and external field test compatibility, reduce the number of user-configured support devices, and reduce costs. We believe that these performance characteristics have great significance for improving military aircraft's ability to dispatch and read-out. According to the current first-line military aircraft, special operations aircraft and transport aircraft size of our army, according to the ratio of 8:1 and the reserve ratio of 2:1, the total scale of domestic fixed-wing military aircraft ATE protection equipment is more than 67-101 billion yuan, and there are constant The need for upgrades and updates will be a major support for future company performance.
The company ushered in a performance turning point in 2018, giving the first time a "Buy rating"It is estimated that the company will realize operating income of 1.049 billion yuan, 1.650 billion yuan and 1.998 billion yuan respectively from 2018 to 2020, and realize net profit of 134 million yuan, 210 million yuan and 286 million yuan respectively, corresponding to EPS of 0.56, 0.88 and 1.19 yuan respectively. /share. The current A-shares are comparable to the listed companies according to Wind's consensus estimate. The average PE valuation of the industry in 2019 is 33.46 times. The company is optimistic about the strategic layout of the company's aviation maintenance and the development prospects of military equipment. According to the 2019 performance forecast, the PE is valued 33-35X. The target price is 29.04-30.8 yuan / share. The first coverage gives a “buy” rating.Risk warning: military revenue growth is lower than expected, military product assembly schedule is not up to expectations, civil aviation maintenance expansion is not up to expectations.


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