Aerospace Hi-Tech: Aero-engine and gas-turbine forgings in sync, with overseas expansion and domestic substitution opening up growth space

Overview

This report is the eighth installment in Huachuang Transportation's "Aerospace Powerhouse" series, focusing on Aerospace Hi-Tech. Founded in 2006, the company is mainly engaged in the R&D, production, and sales of ring forgings made from hard-to-deform metallic materials for aerospace applications, used in aero-engines, gas turbines, space, and other high-end equipment. The report argues that Aerospace Hi-Tech combines four themes: global expansion in the aero-engine supply chain, strong gas-turbine demand, opportunities in the domestic large-aircraft supply chain, and capacity/order release.

Core views

The core views are threefold: first, China's high-end manufacturing faces a historic opportunity to go global, and the company has become an important global participant in aero-engine ring forgings, supported by certification barriers, first-mover customer advantages, and long-term agreements; second, AI data-center construction is lifting gas-turbine demand, and the company's gas-turbine forging business is rapidly opening a second growth curve; third, the domestic large-aircraft and domestic commercial aero-engine supply chains offer long-term strategic opportunities, and the company, as a primary developer of ring forgings for domestic engines, is expected to benefit.

Analysis framework

The report uses a combination of company fundamentals decomposition, industry supply-demand analysis, overseas leader benchmarking, and relative valuation. At the industry level, it focuses on commercial aero-engine OEM delivery ramp-up, LEAP engine volume release, gas-turbine orders and capacity tightness, and bottlenecks in overseas high-temperature alloy supply chains; at the company level, it analyzes business mix, overseas revenue, customer certification, long-term agreements, capacity planning, and orders on hand; at the valuation level, it references domestic peers and Howmet's average PE levels.

Methodology notes

• Valuation MethodRelative Valuation

  P/E valuation

  The report values the company based on expected 2026 net profit, references the average P/E of domestic peers and Howmet, assigns a 60x P/E, and arrives at a target market cap of 177亿元 and a target price of 92.66元.

• Industry AnalysisSupply Chain Barrier Analysis

  Certification cycle and long-term agreements

  The report emphasizes that international commercial aero-engine suppliers usually take a long time to move from initial contact and qualification certification to long-term agreements and then mass delivery; certification barriers and customer stickiness form the core moat.

• Benchmark AnalysisOverseas Leader Comparison

  Why Howmet commands a valuation premium

  The report explains Howmet's valuation premium through its aero business volume and price rising together, margin expansion, debt reduction, and cross-customer and cross-platform product adaptability.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Aerospace Hi-Tech

  Core covered company in the report

  Strengths

  It has R&D and manufacturing capabilities for ring forgings made from hard-to-deform metallic materials for aviation, serves major global aero-engine manufacturers, is seeing rapid overseas revenue growth, has about 60亿元 in orders on hand, and has clear capacity planning.

  Weaknesses

  Revenue in 2024 pulled back in the short term due to domestic customer delivery pacing; 2025 net profit attributable to shareholders declined slightly YoY due to losses at a subsidiary and goodwill impairment.

  Comparison

  The report compares it with Howmet and representative domestic high-temperature alloy component companies, and believes the current valuation is cost-effective.

  Risks

  R&D capability may fail to keep pace with customer needs, market expansion may fall short or competition may intensify, and operating qualifications or third-party certifications may not be sustainably obtained.

• Howmet

  Overseas high-temperature alloy leader benchmark company

  Strengths

  Its aerospace business has rising volume and price, expanding margins, strong cross-customer and cross-platform adaptability, and a high market cap and valuation level.

  Weaknesses

  The report mainly uses it as a benchmark for valuation and business model, and does not elaborate on company-specific weaknesses.

  Comparison

  Howmet's high valuation is used to explain how technology barriers, scarcity, and stable profitability in high-temperature alloy forging support valuation premiums.

  Risks

  Benchmark valuation for overseas leaders may differ due to market conditions, business structure, and profit quality.

• GE Aerospace, Safran, Rolls-Royce, Pratt & Whitney

  Overseas aero-engine customers and downstream industry-chain partners of Aerospace Hi-Tech

  Strengths

  The global commercial aero-engine market is highly concentrated, and OEM delivery ramps and LEAP engine volume growth drive demand for critical forgings.

  Weaknesses

  OEM production ramps are disturbed by supply chain issues, regulation, strikes, and other factors.

  Comparison

  As one of their core suppliers in the Asia-Pacific region, Aerospace Hi-Tech benefits from OEM order growth and delivery expansion.

  Risks

  If engine deliveries miss expectations or customer procurement pace changes, upstream forging demand will be affected.

• Gas turbine industry chain

  Aerospace Hi-Tech's second growth curve

  Strengths

  AI data-center construction drives electricity demand, and leading players such as GE Vernova and Siemens have full order books and tight capacity.

  Weaknesses

  The gas-turbine business is still in a growth-expansion stage, and its scale and profitability need continued validation.

  Comparison

  Like aero-engines, gas turbines have high barriers, long cycles, and room in the after-sales market.

  Risks

  There is uncertainty around data-center construction, gas-turbine OEM capacity expansion, and the conversion of customer orders.

Key data

• Target Price92.66元Priced at 60x P/E based on expected 2026 net profit.
• Current Price60.98元Disclosed on the report cover.
• Expected Upside52%Upside versus the current price.
• 2025-2027 net profit attributable to parent forecast1.9亿元、2.9亿元、4.5亿元The report expects 2026-2027 growth rates of 58% and 54%.
• 2026-2027 EPS forecast1.54元、2.38元Corresponding P/E ratios are 39x and 26x.
• Aviation forgings revenue contribution70%-80%Aviation forgings are the company's core revenue source, and their gross profit contribution exceeds 70%.
• 2024 revenue share of gas-turbine forgings11%The report says the gas-turbine business contribution has risen to above 10%.
• Overseas revenue growth2025年较2021年增长3.66倍The CAGR of overseas revenue from 2021 to 2025 reached 47%, with the share approaching half.
• Orders on hand约60亿元As of 1H2025, abundant orders support future revenue growth.
• 2030 output value outlook约40-50亿元Supported jointly by capacity plans such as the new plants in Deyang and Guiyang, Sichuan, and the overseas base.
• China commercial aero-engine new-delivery market over the next 20 years或超2.6万亿元The report infers the market space for aero-engine ring forgings from this.

Impact & implications

If the report's judgment proves correct, the investment implication is that Aerospace Hi-Tech may upgrade from a single domestic aviation forging supplier to a platform-type high-end forging company covering the global aero-engine, gas-turbine, and domestic commercial aero-engine supply chains. Bottlenecks in overseas supply chains, OEM delivery ramp-up, AI data-center-driven gas-turbine demand, and long-term volume growth in domestic large aircraft could all increase the company's revenue scale, product value per unit, and bargaining power.

Risks

• R&D capability may fail to keep pace with customer needs.
• Market expansion may fall short of expectations or competition may intensify.
• Operating qualifications or third-party certifications may not be sustainably obtained.
• Delivery pace changes among domestic and overseas aero-engine and gas-turbine customers.
• Capacity expansion, overseas base construction, or commissioning of funded-investment projects may lag expectations.
• Subsidiary losses, goodwill impairment, or expense volatility may affect profit release.

What to watch

• Order flow and long-term agreement execution progress with overseas customers such as GE Aerospace, Safran, Rolls-Royce, and Pratt & Whitney.
• LEAP engine delivery ramp-up and the delivery pace of global aircraft OEMs.
• Order implementation and one-stop delivery progress with gas-turbine customers such as Baker Hughes, GE Vernova, and Siemens.
• Commissioning pace of the new Deyang and Guiyang plants in Sichuan and the overseas base in Slovakia.
• Whether overseas revenue share, overseas gross margin, and gross profit share can continue to improve.
• Progress in volume release for the domestic CJ1000/CJ2000 engine programs and the C919 supply chain.
• The pace at which about 60亿元 in orders on hand convert into revenue and profit.