The EH216-S unmanned aerial vehicle system, the flagship product of Ehang, has obtained the world's first unmanned eVTOL type certification on October 13, 2023, and is qualified for commercial operation in the Chinese market. It holds a leading position and uniqueness in the industry. In addition to the announced domestic order reserves of Ehang, the company continues to receive inquiries and interests from some local governments and scenic spots after obtaining the TC. The prospects for future orders delivery and revenue will continue to improve.
1、The low altitude tourism policies are introduced frequently, and eVTOL tourism and sightseeing application scenarios will be the first to benefit
1.1 Strong demand for tourism and sightseeing in China
At present, the domestic low altitude tourism and sightseeing market has a capacity of approximately 60 billion RMB, but it has not been effectively met. There are over 12000 scenic spots in China, including 280 5A level scenic spots, 3720 4A level scenic spots.The number and scale of scenic spots suitable for low-level tourism cannot be underestimate.
1.2 Laws and regulations tend to improve
The Provisional Regulations on the Flight Management of Unmanned Aerial Vehicles will come into effect on January 1, 2024 in China. The isolated flight mentioned in the "Regulations" is beneficial for the tourism and tourism industry in unregulated airspace.
1.3 The policies are introduced frequently
Recently, four departments including the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Finance, and the Civil Aviation Administration of China issued the "Outline for the Development of Green Aviation Manufacturing Industry (2023-2035)", which mentioned the goals of putting electric navigation aircraft into commercial application and achieving pilot operation of eVTOL by 2025, further verifying the positive promotion of market and policies.
The above scenic spots are mainly distributed in suburban areas outside the urban area, and comply with the flight restrictions mentioned in the TC content. Tourism itself is about visiting the beautiful rivers and mountains , while flying in densely populated areas, thunderstorms, strong winds, dark nights and other prerequisites does not meet its definition
2、Ehang orders reserve
2.1 Domestic orders for tourism and sightseeing：
2.1.1 20 EH216-S intended purchase order from Xi’an Sci-Tech Innovation Development Holding Group of Aerospace Investment Co., Ltd.
2.1.2 25 EH216 intended purchase order from Jishou Aizhai Scenic Area, Hunan Province
2.1.3 10 EH216-S have been purchased, with an operating scale of no less than 120 aircraft in the next five years from Western Regions Tourism Development Co.,Ltd.(SZ.300859)
2.1.4 Strategic cooperation with Bao'an District, Shenzhen City, to build the "Bay Area Wing" in Bao'an Happy Harbor - the world's first urban air traffic operation demonstration center. Shenzhen Boling Holdings Group Co., Ltd. plans to purchase 100 EH216-S , of which 5 have been delivered
2.1.5 Established as the East China Regional Headquarters through strategic cooperation with the Hefei Municipal Government,and will receive various support worth $100 million from the Hefei Municipal Government, including coordinating or promoting purchase orders for no less than 100 EH216-S aircraft
The above orders are expected to be gradually delivered according to customer needs after Ehang obtains the TC.
2.2 The overseas orders need to obtain relevant regulatory approval before delivery, thus result in a long delivery cycle . Customers purchase in batches and stages according to their needs
2.2.1 In 2016, Ehang signed a long-term procurement contract with United Therapeutics (hereinafter referred to as "UTHR") for a period of fifteen years, planning to purchase a total of 100 Unmanned Aerial Vehicles. UTHR is a high-tech company engaged in artificial organs. Currently, Ehang has delivered 5 EH216 aircraft, and the UTHR team has established a flight testing base in Canada to conduct relevant operational testing and performance flights of the EH216 series. In the future, UTHR will continue to purchase products from Ehang in stages, including but not limited to the EH216 series.
2.2.2 In 2022, Ehang successively received 100 EH216 pre orders from Indonesian airline Prestige Aviation, as well as 50 EH216 series pre orders from Japanese leading air traffic digital platform company AirX. The former engages in high-end automotive agency business in Indonesia, while the latter engages in helicopter related operational services in Japan. Both customers are highly optimistic about the application scenarios of the emerging eVTOL industry, therefore they purchase products from Ehang and promote them at local exhibitions and events to increase public interest and acceptance.
2.2.3 In 2019,Ehang signed a strategic cooperation agreement with Sinotrans DHL regarding logistics and transportation. Both sides maintain communication unchanged in areas such as logistics express delivery and peer-to-peer delivery, jointly exploring the possibilities and areas of further cooperation, and hope to provide customers with diversified unmanned eVTOL commercial services in the future.
2.2.4 Ehang has signed orders with AEROTREE in Malaysia for 50 EH216 series , including EH216-S, EH216-L, and EH216-F, as well as 10 VT-30 long-range eVTOL.
After an aircraft obtains the airworthiness certificate in its manufacturing country, if the aircraft needs to be operated or flown commercially in another country, it usually requires to be airworthy abroad according to bilateral agreements reached with the target country. This means that the aircraft needs to meet the airworthiness standards and requirements of the target country, and go through the airworthiness certification process of the target country. This process is also known as "verifying model qualification", abbreviated as VTC. The TC issued by the CAAC can provide a certification basis and correspondingly shorten the airworthiness certification process of products in the target country.
3、Financial situation
3.1 Compliance of financial statements
Ehang strictly adheres to the requirements of financial disclosure regulations for listed companies in the US, providing investors with accurate, comprehensive, and timely information. Ehang's financial reports have been audited by PwC.
3.2 Financial forecast summary (Unit: RMB 1000)
Assumptions:
Market assumption: With the improvement of corresponding support policies and the maturity of market acceptance, large-scale scenario applications will gradually begin in 2024/25;
Gross profit assumption: EH216-S product sales gross profit margin is about 60%
4、Conclusions
Ehang obtains the TC for the first time around the world by its diligent efforts surrounded by auspicious clouds which reflect a beautiful implication ,all Ehangers are fully prepared for the spring of the eVTOL industry.
Ehang holds full and accurate orders on the new path of eVTOL,all related aspects just denoise and cohere to embrace the spectacular prospects.
5、Risks
Exceeding expectations of market demand leads to insufficient production capacity and extended delivery cycles.
Competition intensifies
