Event: The company released its 2019 three-quarter report. In the first three quarters, the company achieved operating income of 140 million yuan (+66.8% year-on-year), net profit of 28.38 million yuan (-11.6% year-on-year), net profit after deduction of 1982 million yuan (+155.2% year-on-year), and earnings per share of 0.17 yuan/share. Comment: (1) The company achieved operating income of 140 million yuan in the first three quarters, a sharp increase of 66.8% over the previous year. Among them, Q3 achieved revenue of 58.12 million yuan, a sharp increase of 87.0% over the previous year, mainly due to a significant increase in products delivered during the reporting period with inspection and confirmation revenue compared to the same period last year. (2) The company achieved net profit of 28.38 million yuan, a year-on-year decrease of 11.6% in the first three quarters, of which Q3 achieved net profit of 11.92 million yuan, a year-on-year decrease of 56.3%; however, in the first three quarters, it achieved net profit of 1982 million yuan, a sharp increase of 155.2% over the previous year. Among them, Q3 achieved net profit of 11.32 million yuan, a year-on-year increase of 155.3%. The growth rate of net profit after deducting non-attribution far exceeded that of net profit growth. Mainly, there were no value-added tax rebates in the current period. Other income fell 94.0% year on year, resulting in a sharp decrease in non-recurring income compared to the same period last year, indicating that the company's main business has achieved rapid growth. (3) The company's gross profit margin for the first three quarters was 43.9%, down 2.4 pct from the same period last year, mainly due to a decline in the gross margin of aero engine electronics products; the gross margin for the Q3 quarter increased 0.7 pct month-on-month, and remained basically stable. The sales expense ratio increased by 0.5pct compared to the same period last year, mainly due to the company's increase in market department expenses during the reporting period, which led to a sharp increase in sales expenses; the R&D expense ratio increased by 3.3 pct compared to the same period last year, mainly due to increased R&D funding for business development; the management expense ratio fell 6.4 pct compared to the same period last year, indicating an improvement in the company's operations and management; and the financial expense ratio remained the same as the same period last year. (4) In terms of assets and liabilities, a) accounts receivable increased by 36.1% at the end of the period compared to the beginning of the period, mainly due to a sharp increase in operating income during the reporting period, and the repayment margin was lower than the increase in revenue; c) prepayments, which increased by 245.2% from the beginning of the period, mainly due to the increase in advance payments for procurement and progress payments for ongoing construction; d) accounts payable, increased by 40.5% at the end of the period compared to the beginning of the period, mainly due to an increase in the company's sales orders during the reporting period, which led to an increase in procurement costs over the previous year. (5) In terms of cash flow, net cash flow from operating activities was -691.3% year-on-year, mainly due to a sharp increase in operating activity expenses during the reporting period. Technologies related to aviation inertial guidance and engine parameter collection are mature, benefiting from the accelerated release of demand for military aircraft. The company is based in the aviation field. Its products include aeronautical inertial navigation, aero-engine electronics, drones, etc., and is one of the few domestic enterprises that also have the most critical core technologies in aviation informatization such as navigation, control, communication, and (aviation) computers. In terms of inertial guidance, the team has been working in the inertial field for an average of more than 20 years, overcoming a large number of problems such as algorithms, hardware, software and environmental adaptability, and has accumulated a series of key technologies with independent intellectual property rights to form a diverse product spectrum of Jetlink inertial navigation systems (flexible/fiber/laser gyroscopes), which occupy a certain market share. In terms of engine electronics, the company began developing parameter collectors in 2000, and has developed and delivered a series of products that can be used on dual- and three-engine helicopter platforms, and has developed and delivered several types of flight control computers, which occupy an important position in the field.。 The next ten years will be the peak of China's military aircraft production. The company will continue to benefit from the accelerated release of demand for military aircraft in China. With the development of new products and markets, the company's business is expected to expand to all military classes and even civilian markets such as general aviation. Relying on mature technology, we continue to enrich the product line and create performance growth points. Relying on mature technology, the company continues to enrich its product line: on the basis of existing engine parameter collectors and flight control computer technology, it has independently developed an aero engine electronic control system, completed project acceptance in the pre-research stage, and achieved revenue from professional technical services; after mastering core technologies related to inertial navigation and flight control, it has successfully developed drone systems. In the future, the company will also continue to consolidate and enhance existing technology products, develop comprehensive and derivative new large-scale system technology products, and continue to enrich the product range and expand the scope of business. In addition, as the number and time of product delivery increases, the testing equipment and post-maintenance services developed to support product maintenance, and the expansion of other aviation product maintenance and testing markets will gradually bring in revenue of a certain scale. Investment suggestion: In anticipation of the accelerated release of military aircraft demand in the next ten years, and considering the company's competitive advantage in the field of military aviation and the continuous enrichment of product lines, we expect the company to achieve net profit of 0.69/0.81/0.94 billion yuan and EPS of 0.40/0.47/0.55 yuan in 2019/2020/2021, corresponding to 45/38/33 times PE. First coverage, giving the company an “increase in holdings” rating. Risk warning: The release of military aircraft demand falls short of expectations, industry competition intensifies, and market expansion of new products is blocked.