The company announced its 2019 three-quarter report. The first three quarters achieved operating income of 971 million yuan, a year-on-year increase of 95.95%, and net profit of 53 million yuan, a year-on-year increase of 20.32% over the previous year, corresponding to earnings per share (diluted) of 0.22 yuan. Comments:1. The company's performance is growing rapidly, and we are optimistic about the long-term development of the company's equipment development and aviation maintenance business. (1) During the reporting period, the company's revenue was 971 million yuan, an increase of 95.95% over the previous year. It mainly benefited from the steady growth of equipment development and support business and the growth of aviation maintenance service business due to the expansion of overseas markets. (2) During the reporting period, the company achieved net profit of 53 million yuan, a year-on-year increase of 20.32%, and the growth rate was lower than operating income, mainly due to the following factors: ① During the reporting period, the company's overall gross margin fell 7.75pct to 30.86% from the same period last year, mainly due to changes in the cost structure caused by changes in the company's revenue structure in the current period, which affected the company's profit level; ② During the reporting period, the company's financial expenses increased 4.31pct to 1.86% over the same period of the previous year, mainly due to a decrease in long-term loan exchange income and an increase in interest expenses; the company ③ during the reporting period Credit impairment losses increased by $6.415,100 million over the same period last year, mainly affected by standard account adjustments and an increase in the calculation of bad debt losses receivable. (3) During the reporting period, the company's inventory increased by 50.79% from the beginning of the period and 46.26% year on year, mainly due to the increase in products in equipment development and guarantee business; the company's advance payments increased 339.03% from the beginning of the period, an increase of 86.76% over the previous year, or indicating that the company's orders were sufficient. 2. A leading enterprise in the ATE industry, the testing equipment business has broad prospects for development. The company is committed to the research and development of aeronautical automatic test equipment (ATE). In the field of testing equipment development, the company has now become one of the ATE development companies with the largest number of domestic deliveries, the largest number of users, and the highest level of guarantee. ATE can effectively improve the maintenance efficiency of modern high-precision equipment, reduce usage and maintenance costs, and is widely used in the aviation industry and flight safety maintenance. It is an indispensable maintenance support equipment for all aircraft types and models in China. The company has been deeply involved in ATE development for nearly 20 years, is in a leading position in the domestic industry, and has large-scale ATE production capacity. As user protection methods change, the degree of digitalization of new aircraft avionics systems continues to increase. ATE, as an automated tool for electronic equipment inspection, is expected to usher in increased demand and broad development prospects. 3. The number of helicopters has led to an increase in demand for airborne equipment such as flying ginseng systems and HUMS. The company is a leading domestic supplier of flight parameter recording systems and the first health management and monitoring system (HUMS) installed and verified in China. Airborne equipment products are widely used in various types of domestic aircraft and helicopters, and the main customers are major domestic aircraft assembly units and other aircraft users. At present, the company has achieved many breakthroughs in airborne product development. Mass production of comprehensive data collection systems and integrity usage monitoring systems has begun according to plan, drone flight parameter recording systems and wide-body helicopter HUMS systems have been verified, etc., and has carried out development and mass production of PHM (aircraft fault prediction and health management), CMS (aircraft central maintenance system), EMU (engine health monitoring system), and pilot construction of big data application services. As helicopter failure modes and failure causes become more complex, the importance of flying ginseng systems and HUMS in helicopters is highlighted. With the delivery and accelerated installation of new helicopter models in China, it is expected to drive the company's airborne equipment revenue growth. 4. The traditional maintenance business may grow steadily, improving the layout of the entire industry chain. The company is a leading enterprise in the field of domestic civil aviation airborne equipment maintenance. It has maintenance capabilities for major aircraft models and various accessories, wide professional coverage, and also has CAAC (China), FAA (US) and EASA (Europe) airworthiness system certifications. It has a high market share among independent domestic private third-party maintenance companies, and has strong market influence in the European, African and Southeast Asian third-party maintenance industries. In January 2018, the company announced the purchase of 100% of the shares of Magnetic Aircraft Maintenance Co., Ltd. (MMRO) through cash payment. Through mergers and acquisitions, the company expanded from the company's traditional parts and accessories maintenance to the whole aircraft maintenance field, including aircraft route maintenance and base maintenance, further improving the layout of the entire industry chain in the aviation maintenance field, and thus entering the international market. Through the integration of resources and technology from both parties, the company's performance and profitability may be further enhanced. 6. Profit forecast and rating: Considering the acceleration of equipment modernization and the company's maintenance business is gradually implementing the entire industry chain layout, we expect the company's 2019/2020/2021 EPS to be 0.29/0.38/0.46 yuan, and the corresponding PE is 54X/42X/35X, giving the company a “recommended” rating. Risk warning: ATE and HUMS delivery speed fell short of expectations, and overseas subsidiary MMRO's performance fell short of expectations.