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Aerospace Electronics (600879): The first three quarter results are in line with expectations. Focus on order delivery and reform progress.

Aerospace Electronics (600879): The first three quarter results are in line with expectations. Focus on order delivery and reform progress.
The first three quarters of 2019 results are in line with expectations. The company announced the first three quarters of results: revenue 92.81 ppm, a 10-year increase2.2%; net profit attributable to mother 3.51 ppm, a 10-year increase2.42%; net profit after deduction to mother 3.26 ppm, a 10-year increase3.65%.Revenue and profit maintained steady growth, in line with our expectations. 3Q gross margin increased slightly in the short term, and R & D investment continued to increase.In the single quarter, 3Q achieved revenue of 31 ppm, an annual increase of 4%, and gross margin increased by 0.9ppt to 19.3%, we judge that due to the characteristics of “small batches and multiple varieties” products, the current delivery product structure will fluctuate slightly.The overall period expense ratio increased by 2ppt to 15% (mainly due to the increase in research and development expenses as a percentage 深圳桑拿网 of revenue by 2ppt to 4%).3Q net profit 1.1.6 billion, down 2% a year. The development trend focuses on the progress of product delivery and payment collection.From the asset side, as of 3Q19, the company’s inventory was 10 billion US dollars, an increase of 24% over the beginning of the period. We judge that the current company is full and 4Q is concerned about the progress of product delivery and revenue recognition.At the end of the third quarter of 19th, accounts receivable amounted to USD 8.8 billion, an increase of 44% over the beginning of the period. We are concerned about the progress of the collection of goods. Pay close attention to the progress of the reform of the 9th Academy of Aerospace.The company’s controlling shareholder, the Aerospace Academy, is the only aerospace technology professional academy of the Aerospace Science and Technology Group, and its subordinate assets except for the time vision and scientific research institutes are injected into listed companies.At present, the restructuring of scientific research institutes is getting better, and we are concerned about the progress of the reform of the Nine Academy of Aerospace. Earnings forecasts and estimates remain unchanged.The company’s current consensus corresponds to 32.6x / 28x 2019e / 2020eP / E.Maintain Outperform Industry Rating and Target Price 7.5 yuan unchanged, corresponding to 41x / 35x2019e / 2020e P / E, with a potential increase of 25%. Uncertainty in risk orders and delivery; uncertainty in the reform of scientific research institutes.