Specializing in aviation equipment development, with advanced technology in segmentation fields, coverage for the first time, the company was given an “increase in holdings” rating based in the aviation field, and its main business is aviation mechanical and electrical products. The company has core technology in the fields of aeronautical inertial navigation, engine electronics, etc. With the development of the military aircraft industry, helicopter installation is expected to accelerate, the degree of localization is increasing, and the company's products have broad market space. We expect the company to achieve net profit of 67 million yuan, 73 million yuan, and 82 million yuan respectively from 2018 to 2020. The corresponding EPS is 0.39 yuan, 0.42 yuan, and 0.48 yuan respectively, covering the “increased holdings” rating for the first time. Aeronautical inertial guidance technology is mature, and the company's aviation inertial navigation products are mainly integrated navigation products with inertial navigation technology as the core and integrated information from multiple systems such as satellite navigation systems and Doppler navigation systems. The company is one of the earliest domestic enterprises that successfully developed and applied a high-precision laser quick link inertial navigation system. The relevant technology is relatively mature and has entered the mass production stage. The important position of inertial guidance technology in aerospace guidance and intelligence has determined that inertial navigation is an area that the country urgently needs and focuses on support, and future development can be expected. The engine electronic control system has completed stage acceptance and is expected to nurture new growth points in performance. The company started the engine electronic controller project in 2010, setting the first domestic lead. According to the 2017 report, the engine electronic control system developed independently by the company has completed pre-research project acceptance, achieved professional technical service revenue, and developed a second-generation intelligent, miniaturized and redundant engine electronic control system on this basis. After the R&D results are finalized, it is expected to bring the company subsequent product sales revenue. With the rapid development of the overall aero engine market in China, aero engine systems are also transitioning from traditional mechanical systems to mechatronic systems, bringing opportunities for the company's future development. Focusing on R&D investment, keeping up with the cutting edge of the market, and continuously innovating technology, the company has a complete system and independent core technology. It is one of the few domestic enterprises that also possess core technologies such as navigation, control, communication, and aviation computers, which are the most critical in aviation technology informatization, and has gradually formed a rich product line based on this. The company overcame a large number of problems in algorithms, hardware, software, and environmental adaptability, and gradually accumulated key technologies with independent intellectual property rights. The company focuses on R&D investment, keeps up with market leaders, and continuously carries out technological innovation. Performance is growing steadily. For the first time, core suppliers in the aviation industry chain have covered companies that have given “increased holdings” ratings. They have a high level of popularity in industry segments. Aeronautical guidance, engine electronics, etc. have gradually entered the stage of mass production. Industry prosperity has increased, and there is a lot of market space. We expect the company to achieve operating income of 174 million yuan, 211 million yuan, and 246 million yuan respectively from 2018 to 2020, and net profit of 67 million yuan, 73 million yuan, and 82 million yuan respectively. The corresponding EPS is 0.39 yuan, 0.42 yuan, and 0.48 yuan respectively. Comparable listed company Wind unanimously expects the average valuation of PE in 2019 to be 40.91 times. We gave the company 40 to 42X PE in 2019, and the target price range is 16.8 to 17.64 yuan. For the first time, coverage was given an “increase in holdings” rating. Risk warning: military spending growth falls short of expectations, development of aero-engine electronics products falls short of expectations, industry competition intensifies, etc.