Guosheng Strategy: Domestication of aero engine is imperative and industry meets major opportunities

Guosheng Strategy: Domestication of aero engine is imperative and industry meets major opportunities

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  Original Title:[Guosheng Military Industry Yu Ping (Jin Qilin Analyst)]The localization of aero-engines is an urgent task. There should be Chinese manufacturing in the global 6 billion US dollar market.Enterprises in industrial chains will usher in a period of significant development opportunities.

  1) National-level fund strategic support: Two-machine special plans have been launched before 2017, with a scale of more than 300 billion yuan.

  2) Important guarantee for national security strategy: The two aircrafts are the crown jewels in the industrial field and important strategic guarantees for national security.

  3) The industrial chain is long enough and the market space is large enough: the global two-machine market is expected to reach US $ 600 billion in the next 10 years, and there is huge room for enterprises in all aspects of the industrial chain to develop.

  Second, to benchmark the semiconductor industry, it is imperative that the two machines be localized.

At present, C919 is currently in batch production, but the domestic commercial aero-engine CJ-1000A has not yet been developed and finalized. It is urgent for the domestic commercial aero-engine industry and semiconductor industry to realize independent controllability.

Development characteristics of the two engine industries such as aero-engine gas turbines: 1) High technical barriers: high temperature and high pressure, testing the limits of modern industrial technology.

  2) High economic returns: Due to the high technical barriers of the two-machine industry, once entering the two-machine supply system, the competition threats faced are very small, and the economic returns obtained are high and the return cycle is long.

  3) Long development cycle: The aero-engine development process can be divided into three phases: pre-research, engineering development and use development. A long development cycle is both a risk of entering the two aircraft industry and a high entry barrier for the industry.

In the initial stage due to a large number of tests can also bring the demand for supporting products.

Of course, this is also a risk point for entering the two-machine industry chain.

  Third, the two-machine industry chain investment logic: the global dimension cuts into the two-machine supply system, and the domestic dimension looks at autonomous and controllable acceleration technologies and products landing.

  1) Global dimension: The global two-trillion-dollar track is wide enough and the moat is deep enough, which provides huge development space for the two-machine supporting related companies.

Once relevant enterprises enter the global commercial two-machine supply system, we believe that they can obtain a long-term, stable and upward development space.

Representative companies such as: Yingliu.

  2) Domestic size: In the context of breaking through the “neck neck” technology of the two machines, and the core technology of the two machines accelerates the realization of autonomous controllability, the two machine supporting and host companies participate in the development of new models and new products in the development stageObtaining income from scientific research projects, revenue can be gained through batch production during the downstream batch of prototype aero engine prototypes.

Representative companies such as: Torch Electronics, which develops aero engine materials, Steel Research Gao Na, and OEM aviation power.

You can also pay attention to the grand blasting that has achieved completely autonomous and controllable missile engines.

  Risk reminder: Advanced cutting-edge of two engines such as aero-engine gas turbine cannot be achieved overnight.

  The main content of the report is that the domestic aero-engine localization is imperative, and companies in all sectors of the industry chain will usher in a period of major development.The development of the two machines is a few years ago, and the two machines will usher in significant strategic development potential. The core technology localization is urgent.

  While China’s C919 is facing batch production, but the domestic commercial aviation engine CJ-1000A has not yet been developed and finalized, it is imperative for the domestic commercial aviation engine industry to achieve domestic production.

According to the official website of China Business Development Corporation, the domestic C919 engine has completed all design work of the verification machine and is scheduled to enter service in 2025.

However, the first commercial aircraft engine, the CJ-1000A, has not yet been developed and finalized.

  1.

1 National-level fund strategic support: It is expected that the scale of the national two-machine special plan launched in 2017 will be more than 300 billion yuan. It is similar to the state’s establishment of a national-level industrial fund in the semiconductor field.The direct expenditure is in the order of 100 billion yuan, plus the other local, enterprise and social expenditures, the total amount of special investment is about 300 billion yuan.

The size of future funds is expected to continue to increase.

  The launch of the two-machine special project will definitely bring huge policy dividends to the two-machine industry. The reset will fundamentally solve the long-standing problems of the vertical aviation engine and gas turbine industries. With the support of policies and funds, the built-in aviationEngine and gas turbine technology surpassed the world’s advanced level and achieved a historic leap.

The traditional aviation engine and gas turbine industry will accelerate its development and is expected to break through the monopoly of giants and enter the international market in the future.

  1.

2 Important guarantees for national security strategy: The two aircraft are the crown jewels in the industrial field, and are important strategic guarantees for national security. Aviation engines: the heart of aircraft, and the strategic guarantee for national security.

The development level of the aero-engine industry is a concentrated expression of a country’s industrial foundation, scientific and technological level, and comprehensive national strength. It is also an important strategic guarantee for national security and the replacement of a large country.

Aero engines have the characteristics of long development cycle, high technical difficulty, and high capital consumption. In the world today, there are only five countries, including China, the United States, Russia, the United Kingdom, and France, which are capable of developing aero engines independently., Russia and Britain dominate.

  The number and scale of the two engines (aero engines and gas turbines) can be trimmed from large industrial scales (the global two-machine market size will reach trillions of dollars in the next 10 years, as estimated below), which can be pruned instead of crystals from which manufacturers can be supplied in the global industrial chainCan be ground.

  1) In the field of global commercial aero-engines, the domestic commercial aero-engine CJ-1000A is still in the development stage, and it has not yet become a seat in the global commercial aero-engine field.

At present, the global production of wide-body passenger aircraft is mainly equipped with GE’s GE90, GE9X and GEnx engines and RR’s Trent series engines; while almost all narrow-body passenger aircraft in production are equipped with CFM International’s CFM56 or LEAP series engines.

  2) In the field of global gas turbines, Siemens and GE and Mitsubishi Hitachi stand on top of each other.

According to the 2018 McCoy Power Report’s gas turbine report, in terms of orders, the number of GE gas turbine orders ranked first in the world, and Mitsubishi Hitachi and Siemens ranked second and third.In terms of gas turbines exceeding 100MW, Mitsubishi’s orders accounted for more than 41%, far exceeding GE’s 28% and Siemens’ 25%. In terms of the new generation of “post-F” gas turbines, Mitsubishi received over 49% of orders., GE is 34%, Siemens is 16%; in the traditional F-class gas turbine, GE orders account for 33%, Mitsubishi is 31%, Siemens is 26%.
On the whole, the gas turbine market is showing a tripartite situation.
  1.3 产业链条足够长、市场空间足够大:预计未来10年全球两机市场规模将达到6000亿美元,产业链各环节企业发展空间巨大  我们对全球两机市场规模进行测算,预计未来10年,全球The market size of the two machines is close to US $ 600 billion, and there is huge room for development of enterprises in all links of the industry chain.
Specific calculations include the following three aspects: 1) the global commercial aviation engine market size in the next 10 years: 500 billion US dollars; 2) the next 10 years, the global military aviation engine market size: 15 billion U.S. dollars;Gas turbine market size: $ 80 billion.
  In the next 10 years, the global commercial aviation engine market will reach 500 billion US dollars.
  Assumption 1: The global civil aviation aircraft delivery in the next 10 years is 18,198.
According to the forecasts of Boeing and Airbus, the global civil aviation aircraft deliveries in 2019-2038 are 40760 and 38360, respectively, and we take the average of 39560.
Delivery in the next 10 years will account for 46%, so the global civil aviation aircraft delivery in the next 10 years will be 18,198.
  Assumption 2: Since only a few aircraft such as A380, B747, An124 are equipped with 4 engines, we assume that the aircraft delivered in 2019-2038 are calculated as twin engines.
  Hypothesis 3: The average engine price is calculated according to CFM56, and its full life cycle value reaches 13.75 million US dollars per unit.
According to Commercial Engines data, the share of CFM delivered engines in 2017 accounted for 58%, and the core product CFM56 is the mainstream engine in the global civil aviation market. Therefore, we use the CFM56 engine price as the average engine price for calculation.
During the Singapore Air Show on February 6, 2018, CFMI revealed that it confirmed orders for 3,344 units in 2017 with a contract value of 46 billion U.S. dollars, which corresponds to an average life cycle price of the engine (including new aircraft and maintenance value) of approximately 137.5 billion U.S. dollars.
  We estimate that the global commercial aviation engine market size will be about US $ 500 billion in the next 10 years.
  2) Global military aircraft engine market size in the next 10 years: US $ 15 billion.
We have estimated the size of China’s military aerospace engine superalloy market based on data from the aviation power business.
Airfare Power includes four major airfare OEMs: Shenyang Liming, Western Airlines, Southern Company, and Liyang, Guizhou. There are also Chengfa Company and Lanxiang Machinery Factory in vitro, but the main engine models (such as WS-10Etc.) are in the body.
We calculate that according to the aviation engine and derivative products business revenue of 21 billion yuan in 2019, we estimate that the revenue of aviation engine power accounts for 80% of all domestic aviation market, the domestic aviation engine market size is 26.3 billion yuan.
Assuming that the Chinese market accounts for about 26% of the global market, the global military aircraft engine market is expected to reach $ 15 billion.
  3) Global civil gas turbine market size in the next 10 years: $ 80 billion.
  Gas turbines are widely used in power generation, ship and locomotive power, pipeline supercharging and other energy, national defense, and transportation fields. They are high-tech core equipment related to national security and national economic development.
A gas turbine is a rotary prime mover that compresses and heats gas and sends it into a turbine to expand and do work, converting part of the thermal energy into mechanical energy.
According to the structure, it can be divided into heavy, light, and micro gas turbines. Among them, global heavy gas turbines have formed a highly monopolistic situation, led by GE, Siemens, Mitsubishi, Alstom and other companies; light gas turbines are aero engine modifications, and GE,P & W, R & R and other airlines are leading; micro gas turbines are more involved.
  Global gas turbines, power generation and industrial use, the main demand for heavy-duty gas turbines for power generation, industrial small and medium-sized gas turbine demand is also growing.
We mainly measure the market for heavy gas turbines.
  Assumption 1: The global new installed capacity in the next 10 years is 274GW.
Affected by the development of the renewable energy industry, the global gas turbine market continues to shrink.
According to data from the global power generation industry data provider McCoy Power Reports, the installed capacity of large-scale gas turbines worldwide in 2011 was approximately 71.
6GW, only 30GW in 2018.
Although renewable energy sources such as solar energy and wind power have their obvious advantages, power plants must consider the intermittent nature of renewable energy sources to make plans.
Natural gas is plentiful and inexpensive, and the supply chain is flexible and performs well. It is an excellent complement to renewable energy.
According to the GE report, within the next 10 years, 28% of new power plants worldwide will use natural gas; by 2025, 22% of global power generation will come from natural gas.
Therefore, we assume that the annual global installed capacity of heavy-duty gas turbines will gradually decrease to about 25GW in the next 10 years, for a total of 274GW.
  Assumption 2: Calculated according to 400MW H-class gas turbine, each unit price is 800 million yuan.
Gas turbines can be divided into E-class (combustion temperature of 1100 ° C), F-class (combustion temperature of 1200 ° C), and H-class (combustion temperature of 1400 ° C) according to the combustion chamber temperature. The corresponding stand-alone power is: E-class (37-130MW), F-class (225-300MW), H-class (400-520MW).
At present, the technology of E-class and F-class heavy gas turbines on the market has matured, and H-class and J-class products have also entered the market and have been successfully put into operation.
  Gas turbines for power generation are not standard products, but follow the overall bidding of the project. The order amount of a single gas turbine fluctuates greatly, and often the order amount includes several years of operation and maintenance services.
The price of one F-class gas turbine (300MW) is about 500-600 million yuan.
According to the agreement signed by Siemens and Egypt, the price of one H-class gas turbine (400MW) is estimated to be 700-800 million yuan (100 million euros), and we assume it is 800 million yuan.
  Therefore, we calculated that the global heavy gas turbine market size in the next 10 years = 274GW (new global installed capacity in the next 10 years) / 400MW * 800 million yuan (400MW H-class gas turbine unit price) ≈ $ 80 billion.  2.

The development status and target of China’s aero engine industry 2.
1 Development characteristics of the aero-engine industry: high technical barriers, high economic returns, and long development cycles. We believe that the development characteristics of the two-machine industry such as aero-engines are: 1) High technical barriers: high temperature, high pressure and high speed, testing the limits of modern industrial technology.
  2) High economic returns: Due to the high technical barriers of the two-machine industry, once entering the two-machine supply system, the competition threats faced are very small, and the economic returns obtained are high and the return cycle is long.
  3) Long development cycle: The aero-engine development process can be divided into three major stages: pre-research, engineering development and use development. A long development cycle is both a risk of entering the two aircraft industry and a high entry barrier for the industry.
In the development stage, a large number of tests can also bring the demand for supporting products.
  1) High technical barriers.
  The two engines refer to aero-engines and gas turbines, and are known as the “Pearl of the Crown” and “The Flower of Industry” of modern industry.
The two machines need to work repeatedly in the special environment of high temperature, high pressure, high speed and high load for a long time. They have extremely high requirements for design, processing and manufacturing capabilities, so they have the characteristics of long development cycle, high technical difficulty and high capital consumption.
At present, although many countries can independently develop and produce aircraft, the only countries that have the ability to independently develop aero engine and form an industrial scale are the United States, Russia, the United Kingdom, France, and France.
The high technical barriers to aero-engines cause the global aero-engine supply pattern to appear in an inverted pyramid.
  2) High economic returns.
  As described by the United States “National Key Technology Plan”: This is an area of technology that is difficult for novices to enter. It requires the country to fully protect and use the results of this area, requires long-term data and experience accumulation, and a large amount of national investment.
According to the “Equipment Industry Research” statistics, the aero-engine industry research funds in the United States, the United Kingdom, and France account for 0% of their GDP.
05%, 0.
08% and 0.
06%.
Due to the extremely high-end technology of the aero engine industry, it is in an oligopolistic environment. A mature product can be sold for 30 to 50 years, and the threat of competition is very small. Manufacturers can enjoy the benefits brought by the upgrade of technology and the industrial chain.Worry about competition and market returns.
According to statistics from Japan ‘s Ministry of International Trade and Industry, based on the value created by the unit weight of the product, if the ship is 1, then the car is 9, the television is 50, the computer is 300, the large aircraft is 800, and the aero engine is 1,400.
  3) Long research cycle and large research investment.
  The aero-engine development process can be divided into three major stages: pre-research, engineering development and use development.
And with the progressive advancement of aero-engines, the engine development cycle will also gradually increase. For example, the F119 development cycle is 108 months, and the F119 improved development cycle is 156 months.
From the perspective of research and development investment, generally the new research turbofan engine needs about 2 billion U.S. dollars, and the market is fiercely competitive. Delays in the development of the engine may cause serious economic losses. For example, GE ‘s F120 lost in competition; R & R ‘s development in RB211The use of hollow fan blades when the fashion is not very mature caused the company to go bankrupt.
This is also a risk point for engine industry chain developers.
  2.2 我国国产军用航空发动机发展现状  我国航空发动机的研制是在新中国成立后一片空白的基础上发展起来的,从最初的修理、仿制、改进改型到今天可以独立设计制造高性能航空发动机,走A very difficult development path has passed.
  1) Imitation and improvement.
In the 1950s, China’s aero-engine industry started from scratch and went through a thorny road.
In 1956, China’s first turbojet-5 engine was successfully imitated in Shenyang based on the technical data of the Soviet Union ‘s BK-1φ engine. For a long time thereafter, Chinese aviation engines were mainly imitated and improved, such as turbojet-6, turbojetSpray 7 and vortex spray 8.
  2) Partially independent design.
In the 1970s, China began to design some of the aircraft engines independently, such as the turbojet-13 series engine based on turbojet-7 and the turbofan-9 series engine based on British Spey MK202.
Among them, turbojet-13 began installation test flights in 1985, meeting the requirements for the development of the J-8II aircraft.
  3) Have independent intellectual property rights.
It was not until 2002 that the domestic turbojet-14 Kunlun engine was finalized, and China completed the first process of self-development for the first time, and became the fifth aero-engine producer after the United States, Russia, Britain, and France.
In December 2005, turbofan-10, also commonly known as “Taihang” engine, was successfully developed, becoming China’s first high-performance high-thrust turbofan engine with independent intellectual property rights.
  After more than 60 years of development, China has established a relatively complete engine development and production system, with a series of production capabilities of turboprop, turbojet, turbofan, turboshaft and other engines.
Domestic engines are mainly assembled on main battle aircraft such as fighters, fighters, bombers, fighter bombers, and only a few third-generation fighters are equipped with imported engines.
In terms of transport aircraft, the turboprop engines used in transport aircrafts such as Yun-7 and Yun-8 are all domestically produced.
In terms of helicopters, as the overall technology of the straight -9, straight -8, and straight -10 matures, on the basis of introduction, the series development of the turbo-8, turbo-6, and turbo-16 engines has been developed for China.The rapidly expanding domestic helicopter fleet provides a reliable source of power.
  2.3 我国航空发动机等两机产业链标的梳理  航空发动机产业链包括研发设计、原材料制备、零部件制造、分系统制造、整机装配、整机试验和维修保障等环节;我国目前已基本建立了完整Aviation engine development and production system.  The domestic aviation engine industry chain listed companies are summarized as follows: 3. The investment logic of the two-machine industry chain: The global dimension looks into the two-machine supply system, and the domestic dimension looks at autonomous and controllable acceleration technologies and products. Global dimensions: Global two-machine trillion dollar circuitIt is wide enough and the moat is deep enough, which provides huge development space for the two supporting enterprises.

Once relevant enterprises enter the global commercial two-machine supply system, we believe that they can obtain a long-term, stable and upward development space.

Representative companies such as: Yingliu.
  Domestic dimension: On the basis of breaking through the two-card “neck neck” technology, and the core technology of domestic two-machines accelerates the realization of autonomous controllability, the two-machine supporting and mainframe companies participate in new models and new product development and development at the stage.Obtaining income from scientific research projects, revenue can be gained through batch production during the downstream batch of prototype aero engine prototypes.

Representative companies such as: Torch Electronics, which develops aero engine materials, Steel Research Gao Na, and OEM aviation power.

  3.

1 Aviation Power: Leading internal aviation engine manufacturing companies, companies that interfere with each other everywhere in the engine manufacturing industry replace each other, and can use all types of military aviation engines such as turbojet, turbofan, turboshaft, turboprop, etc.Capability is the sole supplier of three-generation main battle prototype domestic engines.

Internationally, the company is one of the few companies that can independently develop aero-engine products.

The main products and services include military and civil aviation engine complete machines and components, civil aviation engine parts export, military and civilian gas turbines, military and civil aviation engine maintenance support services.

Has a complete spectrum of general aviation main engine business power systems, including the development and batch processing of “Kunlun” (WP-14), “Qinling” (WS-9), “Taihang” (WS-10) and other key engine modelsProduction work.

The company achieved revenue in 2018 (231.

02 billion, +2.

43%), net profit attributable to mother (10.

64 billion, +10.

82%).

  The company flag (Jin Qilin analyst) covers 4 major OEMs, namely Xi’an Company, Liming Company, Nanfang Company and Li Yang Power, which integrates almost all the spectrum of the aero power plant host business.

Belonging to the four major engine OEMs, with years of engine development and maintenance experience, the company was able to become a first-class company in the aero-engine field, leading the development of the national aviation industry.

  The company promotes weight-loss and fitness, reduces costs and increases efficiency, the gross profit margin continues to improve, and the cost rate control begins to improve.

With the promotion of the strategy of “weight loss and fitness, focusing on the main business”, the company’s average three-rate rates have declined.

In 2018, the company’s selling expenses were zero.

93%, a decrease of 0 every year.

20 expenses, the decrease was due to the decrease in sales service fees; (administrative expenses + research and development expenses) expenses 9.

47%, a decrease of 0 per year.

For 79 budgets, the decrease was due to institutional adjustments and expansion of management departments leading to reduced staff budget expenditures.

During the same period, research and development expenses increased by 6.

69%; financial expenses1.

82%, down by 1 every year.

Of the 45 highest, the most important is the strict control of the scale of interest-bearing debt, and the index expenditure exceeds the reduction.

  According to wind’s consensus expectations, AVIC Power 2019?
The net profit attributable to mothers will be 11 in 2021.

70, 14.

21, 17.

19ppm, the annual growth rate is 9 respectively.

96%, 21.

49%, 20.

98%, corresponding to the current sustainable PE is 43X, 35X, 29X.

  Risk reminder: The development of aero engine technology defects may be worse than expected.

  3.

2 Yingliu: The two-machine blade has a track of 100 billion U.S. dollars. Since then, it has been made in China. Let ‘s start with a question: Why is Buffett willing to privatize PCC for 37.2 billion U.S. dollars?

PCC is a global leader in two-machine superalloy blades with an estimated market value of 500 billion.
The first is: 1) The 100 billion US dollar track constructed by two high-temperature alloy blades.
Two-machine superalloy blades are the first key piece of aero engine, and the global market size is expected to reach 150 billion US dollars in the next 10 years.

  2) High barrier characteristics of the two-machine blade track: the demand side continues to grow and supplements the supply side with a small number of dispersions, resulting in a steady growth in the profit side.

High technical barriers; slow technology changes, and difficult opportunities for cornering overtaking; difficult certification; global two-machine customers attach great importance to the long-term and stability of strategic cooperation with blade qualified suppliers.

  3) The two-machine blade has a good business model.

Investment casting is essentially a capital-intensive industry, coupled with high technical barriers, resulting in fewer new entrants.

PCC continued to grow based on the downstream two-machine orders, and achieved good operating stability and sustainability with its monopoly market share, and had good cash flow.

From 2006 to 2015, PCC’s net profit and operating cash flow CAGR reached 17.

78% and 24.

85%.

  Why can Yingliu be cut into the US $ 100 billion track?

First of all, in order to change the monopoly situation of a very small number of high-temperature alloy blade suppliers for a long time, major international two-machine manufacturers such as GE have actively cultivated and released new qualified suppliers to enrich the supplier system and enhance the security of the supply chain.

We believe that Yingliu is one of the few companies in the world where the “technology, equipment, quality and scale” of the two-machine precision casting field meet the strict requirements of companies such as GE, and has mature overseas customers in the fields of construction machineryStrategic Supply Experience.

At present, the company’s two models of two-machine high-temperature alloy blades have passed inspections by domestic and international manufacturers, and it is a fact that they have entered the international two-machine customer supplier system.

2019H1 company’s aerospace new materials and parts products achieved revenue (7230.

750,000 yuan +138.

36%), the gross profit margin level is stable at about 40%.

We expect the company’s two-machine business to double in 2019/2020.

  For benchmark PCC, we believe that Yingliu has successfully entered the global two-machine giant supply system. The two-machine product orders and revenue scale are expected to continue to rise, and future profitability will also be significantly improved.

The first is: 1) Global dimension: Yingliu has entered the global two-machine blade this annual track of 15 billion U.S. dollars, and has successfully entered the global two-machine giant supplier system. In the future, orders will continue to rise in revenueIt is a natural reflection of many core competitiveness such as the company’s asset scale, technical strength, and customer experience.

  2) Domestic size: Two-machine high-temperature alloy blades are among the “two-machine special” breakthroughs and “neck neck” technology breakthroughs to achieve independent and controllable key breakthrough directions.

The company undertakes the research and production tasks of two major special projects and key models of the state, and develops and produces high-temperature alloy blades and other products for China Aviation Development and China Reignite Development, which will directly benefit from the increase in the volume of military aviation engines and gas turbines.

  3) Future development: adhere to the development strategy of “industry chain extension, value chain extension”.

The initial development of the industrial chain (to the parent alloy material end and the finished product end) and the increase in the value of the single-piece blade product will bring momentum to the company’s future development.

In addition, there are reserve projects for small turbo engines and helicopters.

  We expect net profit for 2019/2020/2021 to be 1.

34/2.

14/3.

4北京夜网.0 billion, corresponding to the current estimates of 67X, 42X, 30X, given a “buy” rating.

  Risk Warning: The orders for the blades of the two machines are lower than expected; the development of the traditional casting business exceeds expectations; the assumptions of the market size calculation of the two-machine superalloy blades may deviate from the actual situation.

  3.

3 Steel Research Gaona: The internal high-temperature alloy leading enterprises will fully benefit from the two companies’ independent and controllable development of one of the largest high-end and new-type high-temperature alloy products in China.

Gangyan Gona has the technology and ability to produce more than 80% of domestic superalloys. Its products cover three major fields: cast superalloys, deformed superalloys and new superalloys. It is 南宁桑拿 the most advanced in the superalloy field and has the most complete production typesOne of the enterprises.

The company has the ability to produce over 1,000 tons of aerospace high-temperature alloy master alloys and the precision castings for aerospace engines. It has advanced production technology in deformed superalloy disk forgings and steam turbine blade guards, and has advanced aircraft engine manufacturing capabilities.The ability and technology for the production of powdered superalloys and ODS alloys are much needed.

The company’s various product segments and market segments are important production bases for domestic aerospace superalloys, as well as important suppliers of domestic superalloys for the power industry.

2019 performance forecast, the company’s net profit attributable to the mother reached 1.

35?
1.

600,000 yuan, an annual increase of 26.

43%?49.

84%.

  High-temperature alloy is the key material for manufacturing hot-end parts of aerospace engines. The amount of high-temperature alloys used in advanced aerospace engines reaches more than 50%, which is known as “the cornerstone of advanced aerospace engines”.
According to the data source of the Chinese Society of Metals High Temperature Materials Branch, the current annual consumption of high-temperature alloys in the international market is nearly 30.

In 2018, the annual market demand for chronic superalloys3.

74, with an average price of about 34.

10,000 yuan / ton, the market size of the chronic superalloy industry is about 127.

2ppm; annual high-temperature alloy output is about 2.

175, some still need to be imported.

We expect the annual growth rate of demand for high-end superalloys to be above 15%.

As a domestic leader in high-temperature alloys, Gangyan Gona will fully benefit from the growth in demand for high-temperature alloys.

  The company acquired Qingdao Xinlitong in 2018. Its main bearings are high temperature, specialized production of heat-resistant alloy centrifugal cast pipes and static castings.

Xinlitong possesses advanced production equipment and technology in the same industry in China, which can realize batch-scale production on a large scale. Its business has certain technical advantages and industry barriers.

The significance of the company’s acquisition of Xinlitong lies in: 1) It is conducive to the company’s rapid improvement of the industrial layout of the petrochemical and metallurgical industries, which is a step for the company to expand from the aerospace and shipbuilding sector to the civilian sector; 2) enhancing the ability to integrate customer networks and international technical resources on both sides, The company’s core business of superalloys’ market capacity expansion; 3) Qingdao Xinlitong’s participating shareholders and senior management team have a total of 15-25 years of participation experience, better understanding of petrochemical, metallurgical and other civilian customer needs, the restructuring is beneficial to the resources of both partiesOpen sharing will quickly transform the company’s technological advantages into marketable products.

  In 2019, the company launched a budget stock incentive plan to reform the state-owned enterprises.

In 2019, the company paid 6 to 122 executives, middle-level cadres and core backbones.

The price of 23 yuan / share was awarded to 1241.

$ 08,000 in stock, based on the net profit attributable to mothers in 2018, 2019?
In 2021, the compounded growth rate of net profit attributable to mothers shall not be less than 20%, and the ROE shall not be less than 8% and 8 respectively.

5%, 9%.

  According to the wind’s unanimous expectation, Steel Research Gona will be in 2019?
In 2021, the net profit attributable to mothers is: 1.

71/2.

17/2.

6.9 billion yuan, corresponding to the current expected PE of 43X, 34X, 27X respectively, given a “buy” rating.

  Risk warning: Demand for superalloy products is less than expected.

  3.

4 Torch Electronics: A scarce supplier of special ceramic materials for aero-engines, GE has clearly adopted CMC as the core technology for future development and developed military special ceramic materials. The international embargo on military sensitive materials has highlighted global scarcity.

The company is set to increase investment in 20158.

US $ 26.5 billion was used for the industrialization project of CASAS-300 special ceramic materials, which are particularly suitable for the preparation of ceramic matrix composites (CMC) as reinforcing fibers.

  CMC is regarded as the first choice for aero engine upgrade materials.

CMC has high temperature resistance (working temperature up to 1650 ° C, much higher than 1100 ° C of nickel-based superalloys), low density (only 1/3 of metal alloys, but twice the strength), excellent high temperature oxidation resistance, etc.With outstanding advantages, it is regarded as the first choice to replace the high-temperature alloy of aero engine and realize the “upgrade materials” of weight reduction and efficiency.

GE has clearly identified CMC as the core technology for future development.

GE, one of the three major aviation manufacturers, has been increasing its CMC production.

According to the official forecast of GE, the demand for CMC in the aero engine market will increase 10-fold in the next 10 years.

  Three major application areas of CMC: aerospace, radome materials, and stealth materials.

We estimate that the average market space for special ceramic fibers in the next 20 years will be 760 tons, according to 5.
.

Calculated at 60,000 yuan / kg, the domestic special ceramic materials market space will reach 425 in the next 20 years.

600 million yuan.
  1) One of the uses of CMC: key thermal structural upgrade materials for aero engines.

CMC is the key material for increasing the engine weight-to-weight ratio and reducing the service cost. It has successfully completed a number of engine models and realized engineering production.

  2) Second use of CMC: Aerospace equipment radome material.

CMC is flying at speeds greater than 6.

Required material for 5Ma hypersonic aerospace equipment radome.

Quartz ceramic material is currently 5?
6.
5Ma missile is almost the only radome material available, but it is difficult to meet 6.

Missiles flying at speeds above 5Ma.

The Georgia Institute of Technology test results show that CMC is the most promising radome material for hypersonic equipment.

  3) The third use of CMC: stealth materials for aerospace equipment.

Structural stealth materials have the characteristics of not increasing equipment weight, heat resistance, and resistance to complex environments, and have become the development trend of stealth materials for aerospace equipment.

CMC has excellent properties such as high temperature resistance, wave absorbing, and carrying. It is a high-temperature-resistant structural stealth material with great potential. It has successfully replaced stealth fighters such as F-22 and B-2.

  Torch Electronics is the fourth in the world and the first domestic supplier of special ceramic fibers; the future production capacity of ceramic materials is gradually released, which is expected to create another Torch Electronics.

Eventually, domestic suppliers are also very scarce. There are only three such as Torch Electronics, Suzhou Sophie and Ningbo Zhongxing New Materials.

The placement of special ceramic materials supplied by Torch Electronics in China will fully benefit the rapid growth of emerging industries.

The company has completed the construction of 3 ceramic material production lines, which can release 5 tons / year of production capacity; the planning of the other 3 production lines is also being actively promoted, and the full production capacity in the future will form 10 tons / year of production capacity.

  The military MLCC leader, a large number of new products to form a new performance growth point; capacitors can feedback the global cutting-edge technology of electronic components and produce synergies with the self-produced business.

  1) Self-produced business. As a leading enterprise of military and civilian high-end capacitors, the company fully benefits from the information technology construction of military equipment, the intelligent development trend of industrial equipment, and the expansion of demand for capacitor products brought by the upgrade of consumer electronics products; capacitors have gradually formed newThe growth point of the company’s performance, the acquisition of Tianji Electronics is the target of SLC scarcity, which is conducive to the company’s business extension to the field of microwave communications and 5G.

  2) Agency business. The company’s agency business is mainly based on original products from world-renowned manufacturers such as Taiyo Yuden, AVX, and KEMET.

Driven by consumer demand such as smartphones, downstream customer demand continues to grow.

In the increasingly competitive agency industry, Torch Electronics will continue to consolidate its capital and resources advantages, strengthen the industry’s positioning, and gradually establish a stable cash flow to grasp the forefront of electronic component technology development.

At the same time, the agency business was involved in some of the self-produced civilian product target customers in advance, providing a basis for the development of the self-produced civilian product business.

  According to wind direction expectations, the company’s net profit for 2019-2021 will be 4 respectively.

23, 5.

47, 7.

2 billion yuan, with annual growth rates of 27.

02%, 29.

35%, 28.

27%; corresponding to the current sustainable PE are 29X, 23X, 18X.

  Risk warning: The volume of special ceramic materials is lower than expected; orders for military MLCC and crystal capacitors are lower than expected; business development is lower than expected.

  3.

5 Huge Blasting: HD-1 supersonic missile solid stamping engine is independently controllable, which is the world ‘s leading hard technology market. Concerned that the U.S. government may refuse to deliver a license to export LEAP-1C engines to CFM International, then Huge Blast HD-1 Has the engine of a supersonic missile been autonomously controllable?

  HD-1 solid stamping engine is the world’s leading hard technology, with independent controllability and mature technology.

On December 20, 2019, the HD-1 supersonic missile solid stamping engine was designed by an authoritative expert. The results showed that the performance parameters of the power system meet the requirements of the missile’s overall indicators, the technology is mature, and it has reached the international advanced level.

We believe that the HD-1 solid-punching engine is fully autonomous and controllable and will not affect the future development of the military trade business.

  HD-1 missile core solid stamping engine technology is the only one in the world that is mastered by China, the United States and a few European countries.

Solid stamping engine technology is the upgrade direction of liquid stamping engine technology. Relative to liquid stamping, it has the following advantages: ① small mass and high specific gravity; ② strong penetration ability; ③ use and maintenance, greatly reducing preparation time and other important advantages.

We believe that the HD-1 supersonic cruise missile has the advantage of its solid-impact engine. Once it is finalized, it will compete with the international military trade market-the BrahMos missile developed by India-Russia jointly developed a liquid-impact engine. The military trade order is expected.
  The significance of the HD-1 solid stamping engine obtaining authoritative identification lies in: 1) the core solid stamping engine technology of the HD-1 is mature, and missile shaping is only a matter of time; 2) the design results of the HD-1 solid stamping engine introduced by authoritative expertsThe appraisal obtained the unanimous consent of the appraisal committee of “the academician of the Chinese Academy of Engineering serves as the director and deputy director of the appraisal committee, a total of 13 expert members”.
The result appraisal formed by the national authoritative expert group is the reassurance given to customers during military trade sales.

  Harmonious time and place, the first unit of the military trade track.

  1) Tianshi: In March 2015, military-civilian integration rose to a national strategy, requiring benchmarking companies.

  2) Geographical advantage: The company is one of 14 local military industrial state-owned enterprises in the country with first-class weapon manufacturing qualifications and fire wage quality; in fact, the controller is the Guangye Group affiliated to the Guangdong Provincial Government.project.
  3) Renhe: The company has formed the missile dream team structure, as well as the deployment of the military-civilian benchmarking enterprise team, missile development, and sales teams are all domestic top master figures.

The grand blasting of the military-industrial state-owned enterprise platform with a mixed reform mechanism can attract military high-end technology and talent bonuses to be released here.

  As of the end of June 2019, R & D expenses have been invested in the HD-1 project3.
US $ 2.7 billion, which is currently invested by the company itself.

We believe that the huge expenditure of the state-owned private enterprise as a state-owned private enterprise is not only an advantage of the time and place, but also a manifestation of human harmony; it also shows the courage of the senior management team and the confidence in the success of the HD-1 and JK projects.

  The immense blasting of the military-civilian integration benchmark, the value of the military trade platform is outstanding. At present, the high-definition, JK two military trade missiles have been approved for export, waiting for the huge performance flexibility brought by the order landing.

Importantly, the military-industrial state-owned enterprise platform of the grand blasting mixed reform mechanism can continue to attract military high-end technology and talent bonuses to be released here.

  The market value of the grand blasting can be divided into two parts, one is the basic disk contributed by traditional mining suits, civilian explosions, and military services; the other is used as a domestic military-civilian integration benchmark configuration and military trade platform, and it is exported in HD and JK missilesOn the basis of the approval of the project, the platform value will be gradually recognized by the market; finally, the two types of missiles will be finalized in order, and the order will be gradually expanded, and it will be accelerated as the follow-up.

We expect net profit attributable to mothers to be 3 in 2019-2021.

03, 4.

53,6.

8.9 billion yuan, corresponding to the current expected PE of 60X, 40X, 26X, given a “buy” rating.

  Risk reminder: JK, HD missiles are progressing, and military trade orders are uncertain or less than market expectations.

  Fourth, the risk reminds that the shortcomings of the two advanced aircraft and gas turbines are not achieved overnight.

A long aeroengine development cycle is both a risk to the two aircraft industry and a high barrier to entry.