Event

On October 10, the company released a report for the third quarter of 2020, showing that its operating income in the first three quarters was 353 million yuan, an increase of 75.30% over the same period last year, and the net profit attributed to listed companies was 82 million yuan, an increase of 1441.00% over the same period last year.

Brief comment

The development strategy of intelligent unmanned system is very effective. On October 10, the company released a report for the third quarter of 2020, which showed that the operating income in the first three quarters was 353 million yuan, an increase of 75.30% over the same period last year, and the net profit attributed to listed companies was 82 million yuan, an increase of 1441.00% over the same period last year, accelerating growth relative to Q2. Both net profit and revenue have achieved rapid growth, benefiting from the results of the company's continuous investment in intelligent unmanned systems since 2017, and the stable landing and volume of contract orders for relevant product systems; and under the trend of military satellite upgrading and satellite Internet development, the original core business has maintained steady growth.

Inventory continues to increase, indicating that the company is actively preparing for production. The company's inventory continued to grow in the first three quarters, and the inventory in the first three quarters was 321 million yuan, an increase of 54 million yuan over the first half of the year, indicating that the company is actively preparing production. The contract debt reached 29 million yuan, reaching a new high this year.

With inertia technology as the core, it runs through the whole industry chain of products. Based on the core inertial technology, the company develops high-precision inertial devices, promotes the research and development of communication and sensing devices, and integrates them into intelligent unmanned systems to form a complete industry chain of intelligent perception, intelligent decision-making and intelligent control. The breakthrough of unmanned system business will further stimulate the company's technological potential to achieve multi-level product supply and provide cutting-edge solutions for self-driving, satellite Internet, military information and other high-growth markets.

Domestic inertial technology leader, the strategic results of intelligent unmanned systems show that the company's strategic transformation is effective, and it is expected to maintain a high level of growth in the next three years. Since 2015, the company began to develop unmanned system business, and focused on the research and development of unmanned target aircraft, has made a breakthrough. Under the complex conditions of the surrounding situation, the actual combat training of the military is constantly advancing, which will provide the company with a sustained driving force for performance growth.

As the core strategy of the company, unmanned system business will continue to benefit from the trend of military unmanned and information. In terms of drones, Xingwang Yuda has completed five types of unmanned target aircraft product systems of low speed, medium speed and high speed. Unmanned target aircraft, as the core equipment of the army's actual combat training, the military demand is expected to continue to increase substantially; in terms of unmanned vehicles, the company signed a strategic cooperation agreement with the 713 Institute of China Shipbuilding heavy Industry to make up for the technical deficiency. The company has also been qualified for bidding for military unmanned vehicles and is expected to form orders and complete small batch deliveries this year based on the underlying technical advantages. Driven by the war demand of unmanned and information technology, the allocation proportion of unmanned equipment is expected to reach 20% MUR 30%, and the company will continue to benefit.

Inertial navigation system has technical advantages, with the development of self-driving, the company's business is expected to grow at a high speed. At present, the company has the ability of independent research and development of core inertial devices, which is not limited to the strict blockade of foreign countries. As the only supplier of Baidu, Inc. Apollo self-driving ecological inertial navigation system, combined with the successful networking of Beidou system and 5G vehicle networking application scene, the company's inertial navigation business is expected to achieve breakthrough growth and will fully benefit from the promotion and landing of self-driving. As a necessary solution for self-driving at present, the company has achieved more than 60% of the market share, and has supplied L4 products in small batches, and will develop to military products to further open up the market development space.

Satellite communications plate abruptly rise abruptly, moving ZTO Express products ushered in new development opportunities. As the company's traditional core product, Satellite Communication Mobile ZTO Express Antenna has a leading advantage in technology and is an important contribution to the company's profit growth. In the military aspect, relying on the core technology of moving ZTO Express antenna, the company has seized the opportunity of upgrading and upgrading military communications satellites, with a market share of about 50%, and related business has been comprehensively expanded to all arms of arms; in civilian terms, Leo satellite networking is the communication basis for the integration of heaven and earth, which will generate broad market capacity and provide new growth conditions for the company. Relying on the first-mover advantage of homologous technology and product accumulation, Xingwang Yuda will be in the leading position of private enterprises in this field, and has carried out pilot cooperation and discussion in the field of marine fishing vessels.

It is estimated that the company's operating income growth rate from 2020 to 2022 is 6.38,8.93 and 1.143 billion yuan respectively, and the year-on-year growth rate is 60,40 and 28% respectively.

The net profit of homing was 1.33,1.83 and 246 million yuan respectively, with year-on-year growth rates of 1009.43%, 37.47% and 34.32% respectively, corresponding to EPS 0.85,1.17,1.57 PE of 53.91,39.22,29.20, respectively.

Risk hint

1. The demand for aviation drones is lower than expected.