In response to the recent news from some media that the company was involved in the UAV engine project, the company announced that the company had conducted preliminary research and development and trial production of UAV engine related technologies and products. Now it has completed the trial production of a small turbojet engine experimental prototype, and the company has mastered but only the engine manufacturing technology of the experimental prototype model, but it does not mean that it has mastered all the technology of the turbojet engine. At this stage, no batch production capacity has been formed, and it is only in the pre-production stage of technology, production and technology. up to now, no large-scale investment has been carried out, and the investment plan of the project has not been formulated. We analyze this as follows:

Main points of investment

Dabbling in the UAV engine project shows the company's attempt at a new business. With the promotion of China's economic transformation, the demand for coal in economic growth continues to decline, which leads to a decline in the growth rate of demand for coal machinery; at the same time, due to the rapid expansion of coal machinery production capacity, leading to increasingly fierce competition in the industry. In this context, it is reasonable for the company to actively seek new business.

The prospect is attractive but the process is tortuous. Engine manufacturing belongs to the "short board" link of China's aircraft manufacturing industry, and if the company's UAV engine can be successfully developed, it is expected to open up another growth pole for the company's development; at the same time, there are many difficulties in engine research and development, mass production and market development, and the company's choice of UAV engine project may face many twists and turns.

The impact on the company's performance is expected to be limited. At present, the company's UAV engine business is only in the trial production stage of the experimental prototype, and the company has not yet made a large-scale investment. the project needs to go through many links, such as shaping, investment, pilot test and so on, from the trial production stage to the large-scale production and sale of the experimental prototype, and it is expected to have a limited impact on the company's performance in the short term.

Finance and valuation

We maintain the company's performance forecast that the earnings per share from 2012 to 2014 are 0.36,0.44,0.55 yuan respectively. According to the valuation of the comparable company, we maintain the target price of 6.80 yuan and maintain the company's overweight rating.

Risk hint

Technology development risk, market development risk.