Core ideas:

1. The company's performance is in line with expectations. In 2019, the company achieved revenue of 1.495 billion yuan (+ 98.1%), net profit of 68 million yuan (+ 50.68%), and non-return net profit of 51 million yuan (+ 45.7%). In the first quarter of 2020, the company achieved revenue of 293 million yuan (+ 25.81%) and net profit of 168200 yuan (- 44.12%). The company's revenue growth against the epidemic is due to the smooth delivery of orders for development equipment and the smooth progress of overseas air asset management business.

two。 The development of equipment is progressing smoothly, driving the growth of the company. The company focuses on airborne equipment and automatic testing equipment (ATE) two major aspects of research and development, is currently working on 8 projects, making smooth progress. The second-generation product HUMS is installed in straight 20 and gradually expanded; ATE obtains new customer orders in the military and civilian fields respectively; and the first-generation product flying parameter system continues to iterate out a variety of models, driving the company's performance growth.

3. The impact of the epidemic on the company's aviation maintenance business is limited. The impact of COVID-19 's epidemic situation has led to a decline in airline occupancy and daily aircraft utilization, reducing the volume of aviation maintenance business. However, "passenger-to-cargo" increases the navigation demand of cargo aircraft to a certain extent, correspondingly increases the maintenance business of the company, and can hedge the reduced commuting repairs of passenger airlines.

4. Maintain the "overweight" rating. We predict that the EPS of the company from 2020 to 2022 will be 0.32 yuan / 0.37 yuan / 0.54 yuan respectively, and the corresponding price-earnings ratio will be 42 times / 36 times / 25 times respectively. Company HUMS supporting or accelerating, ATE military and civilian business to further expand, the third generation of new product EHM is under research and development, good prospects for development, to maintain the "overweight" rating.

5. Risk tips: HUMS installation is not as expected; equipment research and development is blocked; epidemic situation affects civil aviation maintenance market.