Aviation equipment manufacturers threat

Aviation equipment manufacturers
Lee Program
Machinery Industry Fellow
021-3856 5920
ligangl@xyzq.com.cn
Air Power (600893)
Additional 2 billion yuan targeted replacement benefits Prospectus
Recommended
(Maintain)
May 19, 2009
Investment points
Event:
Company today announced plans for additional orientation: non-public offering of shares to be not more than 120 million shares, net fund-raising not more than 20 billion yuan, the pricing benchmark for the Board of Directors resolution on announcement day, issued at a price not less than 20 days before the pricing benchmark transactions price of 90%. In addition to raising funds to add liquidity, the other into four projects: 1). The third generation of aero-engine parts to expand production capacity 2). Aviation outsourcing technical components 3). The construction of gas turbine product line 4). Stirling solar engine production and demonstration projects. (Prospectus proportional allocation of the items see Table 1)
Comments:
The basic orientation of additional plans in line with our previous expectations, we are the company's positive view of the refinancing. We are optimistic about the company's cost-effective fund-raising projects and market outlook, raised for the project completed and put into operation to raise the company's production capacity, nurturing the company's future growth performance; Prospectus supplement the liquidity will improve and optimize the company's financial structure to alleviate the financial burden of the play "replacement capital efficiency" of the role in enhancing the quality of the company's assets and operating efficiency, thereby changing the current status of work for the banks, the real effectiveness of the business into the return to shareholders.
􀁺 issuance price of not less than 18.68 yuan / share
Benchmarks in accordance with the pricing on the company twenty-fifth meeting of the Board of Directors resolution notice on May 18, 2009, the issue price of not less than 20 days before the pricing benchmark stock average price of 90%, that is not less than 18.68 yuan / share.
􀁺 raise one vote: the third generation of aero-engine parts and components production capacity expansion project
Companies to raise funds as one of the items, the third generation of aero-engine parts and components production capacity expansion project plans to invest 920 million yuan, of which the use of the original 430 million yuan in fixed assets, to raise funds invested 490 million yuan, plans to raise about 24% of the total funds . After the implementation of the project, the company's third generation of aero-engine components can be an annual production capacity from the current annual production capacity of 2400 units to 4800 units, the company is expected to basically meet the needs of the third generation of aero-engine components orders for about 5,000 per year level. The project addresses the third generation of aero-engine production capacity expansion and the technological transformation to meet future national defense needs of the Air Force fighter planes equipped with good economic efficiency and the important significance of the national defense.
􀁺 raised for the project two: aviation parts and components of foreign trade sub-technical items
Subcontracting business aviation parts and components trade is technological projects in order to change the current high growth due to foreign trade brought about by outsourcing the production capacity, products, and the status of non-payment of the. Project plans to invest 470 million yuan, invested by the fund-raising, fund-raising plan about 24 percent of the total. Project and upon completion, will form a delivery of 80 million U.S. dollars the amount of subcontracting production capacity, including GE parts and PWC parts and components production line production line, as well as other parts of Health
Please read the last page of notes and important statement rating
SG Securities R & D Center Web site: www.xyzq.com.cn E-mail: yangchen@xyzq.com.cn - 2 --
Company Comments Report
Production line, the former location of two production lines based on a wholly owned subsidiary of Wright projects, other parts of the production line based on the Company's headquarters location.
􀁺 raised for three projects: 30MW class gas turbine project
Gas Turbine QC280/QD280 production line construction project, the project plans to invest 630 million yuan, of which about 5 to raise funds invested billion plan Prospectus about 25% of the total. 30MW gas turbine as large QC280/QD280 reached the international advanced level of the third generation of gas turbines, power level of GE's best-selling similar to the LM2500 as the core of high-tech energy-saving equipment widely used in power generation, oil and gas pressurization, ships and tanks power, such as market demand and broad prospects. After the completion of the project has an annual production capacity of 20.
􀁺 raised four investment items: solar-powered Stirling engines and demonstration projects
Company began in 2005 to develop solar-powered Stirling engine's main components, machine started to develop in 2006 and has now been completed ontology design drawings, plans to produce a prototype in 2009, Stirling solar engine annual production capacity of 50 projects including a Taiwan's production line and 1MW-class demonstration of solar thermal power station. Plans a total investment of 110 million yuan, to raise funds invested 97 million yuan, accounting for fund-raising total of 5%. Dish-type solar thermal power generation due to high conversion efficiency, reduced costs, a large space (see Figure 1), and network distribution and were found to be suitable as a solar thermal power generation technology the most promising line of business, while the disc as a domestic solar thermal power technology research and development and pioneer equipment manufacturers, the company Stirling engine can be a view to future market demand.
􀁺 funds to add 440 million yuan of liquidity-effective replacement
In addition, the company intends to come up with about 22% of the fund-raising, about 4.4 billion yuan was used to add liquidity to meet the Company as an aviation parts and components production cycle engine and its resources to occupy the length and the operating characteristics of a large quantity, reduce the current high levels of assets and liabilities (in March 31, 2009 financial statements of the parent company of a diameter of 73%), reducing the financial burden of the company to "benefit replacement funds" role.
􀁺 profit forecasts, valuation and investment rating:
If public offering by the success of plans to issue, in accordance with the equity raising the upper limit of the calculation, the company's total equity from the current 4.4 billion shares to 5.6 billion shares to expand, the expansion ratio of about 27% of the company's performance in 2009 has some diluted, consider Wright and other projects that have been pre-invested companies are expected to 2009,2010 can be formed in production capacity, coupled with the added liquidity to alleviate the financial burden on the performance of the company's diluted relatively limited.
Since the issuance of the final orientation Prospectus point scale and has not yet been determined, we have not adjusted the company's profit forecast, we will closely follow the company's issuance of the process of orientation, the continuation of the company in 2009 and 2010 earnings per share were 0.51 , 0.66 million profit forecast.
We continue to reiterate our original view: "short-term profits to upgrade + to enjoy a premium valuation," the company we are optimistic about the economic benefits of refinancing the project and product market outlook, the company's future profitability based on the room, and good prospects for the development of more precise and asset integration is expected to continue to be given the "Recommended" investment rating.
Appendix I: Company pre-tracking reports:
1. "Taihang see military operations carried subcontracting business briefing beam research "---- ---- 2009-1-18
2. "Driving force for the revitalization of the aviation companies to the depth of study "---- ---- 2009-3-3
3. "Power Air to take off in China - reiterated its air power (600,893) to promote the views of the company "----- PPT --- 2009-3-26
4. "In 2008 slightly better than expected performance of new products for civilian use初显energy companies monoceras "----- 08 Comments Report ---- 2009-4-1
5. "Cost of control products for civilian use only emerged初显cusp of new energy research information courier company "---- ----- 2009-4-10
6. "Stirling engine to add new momentum - one of the company business analysis products for civilian use tracking reports company "---- ---- 2009-4-15
7. "Challenges beyond the thermal power of photovoltaic - solar energy power generation system disc industry outlook study "---- --- 2009-5-5
R & D SG Securities
Center Web site: www.xyzq.com.cn E-mail: yangchen@xyzq.com.cn
Appendix II: data charts:
http://translate.google.com/translate_t#

Xi'an AeroEngine PLC ( here)