COMPANY

AviChina Industry &月視 Technology Company Limite場照d (“AviChina”) (Stock: 235吧對7.HK) earlier announced its larges近畫t-ever single investment toget亮店her with China AVIC Avionics 暗妹Equipment Co., Ltd., its non-who街在lly-owned subsidiary, in Sic對現huan Chengfei Integration Technolo風票gy Co., Ltd’s (“快鐘CITC”) major assets restructuring. 家要The two companies wil匠腦l subscribe for 100,300,司微000 shares 33,100,000 new 上月shares of CITC, respectively, at a 費又consideration of not more th湖分an RMB1.665 billion子錯 RMB550 million in cash. Upon co紙一mpletion, AviChina will h服問old a total of 8.4匠要5% equity interest in CITC, th山少e largest share among Aviation Indu報兵stry Corporation of China’s 時但affiliated enterprises w謝家hich participated in 舞玩this subscription. The major assets res化子tructuring plan a務月s disclosed by CITC includes p大冷urchasing the ent遠就ire stakes in t兒東he three target ente文街rprises, i.e. She懂爸nyang Aircraft Corporation, Chen鐘多gdu Aircraft Corpo做事ration Jiangxi Hongdu Technology Corp個短oration Limited owne女分d by AVIC, China Huarong Asset Manag器月ement Co., Ltd. HONG子區DU Aviation Indu吧男stry Group LTD.. The proposed asset機道 acquisition is estimat媽嗎ed to be valued 厭窗at up to RMB15.也上847 billion, making i鐵技t the single larges報務t asset injection in A-share’s th黑銀e military industrial sector.

Backed with policies, AVIC will bui也商ld China’s Lockheed Martin

A new round of 務物reform was initi電木ated by the Third Plenary Session of 書城the 18th CPC Central Committee amo農放ng state-owned enterprises in China,劇答 in which, the refor算區mation of military industrial要日 enterprises is志些 acting as a leading dr文師iving force of t費為he SOE reform. The injectio山也n of core assets of a要火eronautic defense business by AVIC員們, AviChina’s parent company, into 少術the listed company de新公monstrates the open-up attitude of th電那e authorities in charge of military匠說 industry as to the reorg輛我anization listing of mil兵校itary industrial化可 enterprises. Upon都美 completion of the acquisition,鐵照 CITC will integrate warplane a老腦ssets which comprise請下 the production, research development費光 of warplanes of個店 the third fourth generat錢上ions, assets related to air-surface 習要missiles. By taking ownership of those友短 defense equipment assets that are of刀謝 utmost strategic significa喝身nce in AVIC, it will be the first dom近嗎estic-listed enterprise specialized裡道 in entire warplane production, 物外comparable to L可務ockheed Martin in拿喝 China. The reform in the 她新national defense the mi就聽litary industry, tog文看ether with the advanceme和信nt of the securitiza公會tion of military indus湖技trial assets, will be a catalyst for愛學 the entire military文鄉 industrial sector, which in turn will 會小create a series o店可f catalytic effect on the affiliated 短可companies of AVIC去老, including sub雪友sidiaries such as技上 AviChina AVIC Avionics.

With business scope extended to def花男ense equipment, AviChina t離花argets to be China’s answer to Boeing林為

AviChina is the only overse裡問as-listed compan北時y of Aviation Industry Corporation of 月友China this assets reorga坐你nization will extend the Company’s av麗音iation business to cove又跳r defense equipment. AviChin理好a has previously expan工算ded its civil aviation manufacturin什文g business through a好嗎ssets reorganizati花時on, merger acquisition has be友門come the largest ma綠鐘nufacturer of civil helicopters a l行作eading supplier of avionics s愛答ystems in China. As the Company expand船要s into the defense equip雨內ment sector, it is believ術白ed that it will help AviChi些哥na broaden its presence in the industr現藍y chain, optimize黑術 its investment portfolio dev我跳elop into China’s睡農 answer to Boeing.

Major investment banks raise微還d the ratings for AviChi河和na considering the benefits that t如低he company will continue t有讀o enjoy

The market’s growing interests in身少 the securitizat從很ion of military indu數器strial assets indicates an unpre票間cedented development opportunity for th海看e military industry sector in China.快火 Investment in companies connected大村 with the military 了了industry will be the focus in 2014朋坐. Therefore, AviChina’s subs書厭tantial subscri道機ption will directly benefit們答 from the appreciation of CITC. B文嗎ased on the average P/E of the milit草習ary industry sector of A shares, a 照廠huge sum of futu和中re earnings can be secured even on子短 a conservative estimate.雜喝 Subscription of C麗高ITC shares will also enable AviChi跳內na to participate in a more diver火爸sified aviation busine機林ss, share the benefits brought by the c男務ontinuous growth in China’s nati議視onal defense indus得場try, integrate the current busin數門ess with the defense assets, f畫話acilitate the sound development of the 還睡overall industrial cha了分in. Also, considering the continuous s師廠table growth of t窗不he existing busi厭微ness of AviChina, th綠什e profitability of the C在問ompany is expected to grow signifi站道cantly. AviChina is the lar為笑gest platform for assets integrati朋物on under AVIC. Consid雪冷ering its importance strategic pos好城ition, Goldman Sachs, Citibank 筆有BOCI raised the target price main志音tained the “Buy” ratin老小g for AviChina.