Aeronautical Power: Steady And Stable &Nbsp; Good Prospect Of Gas Turbine.

The demand for Aeroengine products is huge, and the company's revenue is expected to increase steadily.

China's military spending is expected to exceed 1 trillion yuan in 2015.

With sufficient military support, the air force will speed up the purchase of new fighters, and the Navy will speed up the construction of the carrier battle group, and the army will fill the gap of the aviation helicopter.

As the engine assembly plant of Qinling Mountains and the 35% value component provider of Taihang engine, the company is expected to grow steadily, and there is an expected growth possibility under the background of unpredictable international environment.

The demand for warship gas turbines is urgent, and industrial gas turbines are in short supply. The 30MW gas turbine of the company has a bright future.

The company is the only manufacturer of 30MW gas turbines in China.

Large scale surface ship gas turbine replacement and new large surface vessels need large numbers of gas turbines. We expect that the QC280 market space will be US $576 million in the next 5 years. The domestic high-power industrial gas turbines are absent. At present, more than 200 industrial gas turbines equipped in China are all foreign products. We believe that the QD280 import substitution space is huge, and the market demand in the next 5 years is 308 million US dollars, and it is expected to be mass produced in 2014.

Foreign trade subcontracting trade has a great impact on the environment, and it is expected that this business will grow better.

Luo Luo company predicts that in the next 20 years, the world will need 132 thousand engines with a total value of US $701 billion.

China's cost advantages make it huge room for growth.

With excellent products and good service, the company has been recognized by subcontracting partners, and has been working with GE and other international manufacturers for a long time.

At present, the foreign trade subcontract of the company's Aero Engine occupies 46% of the total domestic subcontract volume, and the export volume ranks 29 in the domestic market for 29 consecutive years.

Although the report shows that the company's business has declined year by year, the reason is that it is mainly affected by the large foreign trade environment rather than the company's own reasons.

We believe that Future Ltd subcontracting business will continue to grow steadily.

On the non aviation business, the company will continue to explore diversification and strive to create more profit growth points.

In the three year plan formulated by the company in 2010, the planning company's non aviation products will maintain an annual growth rate of more than 30%, reaching the goal of "5 billion yuan" in 12th Five-Year.

Although the company's major asset restructuring has been suspended, it may still be reopened in the future.

The company announced in October 20, 2011 that asset restructuring was suspended.

But we believe that aero engines need long-term and concentrated investment from countries, and aero engine companies all over the world present a highly integrated situation.

Therefore, the integration of domestic aero engines is an inevitable trend, and it is also the only way to promote the development of aero engines in China.

The company is still the only platform for aero engine integration of China aviation industry, and the asset restructuring plan may still be restarted in the future.

Earnings forecasts and ratings: we expect the company's diluted EPS for 2011-2013 years to be 0.27 yuan, 0.34 yuan and 0.49 yuan respectively, corresponding to PE 50 times, 39 times and 27 times.

Considering that the company faces huge engine market space and the expectation of asset injection as the only integrated platform for aviation power assets, it maintains a "buy" rating.