The company released three quarterly results in 2019: revenue 971 million yuan (+ 95.95%); return net profit 52.86 million yuan (+ 20.32%), actually close to the performance forecast center; deducting non-return net profit 41.39 million yuan (+ 27.97%).

Equipment development and guarantee business, overseas business growth, income structure affects gross profit margin. In the first three quarters of 2019, the company's revenue was 971 million yuan (+ 95.95%), mainly due to the steady growth of equipment development and support business and the growth of aviation maintenance service business due to the expansion of overseas markets. The growth rate of the company's homed net profit (+ 20.32%) was significantly lower than that of revenue, mainly due to a sharp decline in gross profit margin (26.1% gross profit margin, down 7.74pct from the same period last year). In the first three quarters of 2019, the company's cost control capacity was enhanced, with expenses of 209 million yuan (+ 61.5%), accounting for 20.69% of operating income, reducing 4.41pct compared with the same period last year.

In the increase in products, a big increase in accounts received in advance, or indicate that the company's orders are full. At the end of the reporting period, inventory was 538 million yuan, an increase of 50.79% over the beginning of the year (36.79% and 56.82% respectively in the same period from 2017 to 2018), mainly due to the increase in products in the equipment development and guarantee business; the advance payment was 67.67 million yuan, an increase of 339% over the 15.41 million yuan at the beginning of the year, mainly due to the increase in payment received in advance. The company is increasing the number of products, increasing the amount of accounts received in advance or indicating that the company's orders are full.

The company won the international bidding project of airborne electronic components automatic test platform worth 14 million yuan, which broke the monopoly of foreign manufacturers in the field of civil aviation airborne equipment automatic test system, and expanded the company's business scale in civil aviation automatic test system.

We adjust our earnings forecast and continue to give the company a "prudent overweight" rating of EPS0.34/0.47/0.66 yuan per share in 2019-2021, corresponding to the valuation of 47-34-24 (2019-11-1).

Risk hint: military procurement is lower than expected, and competition in civil aviation maintenance market intensifies.