Incident: On December 13, the actual controller and two executives sharply increased their holdings of the company's shares by a total of 3.1171 million shares. The average increase price was 33.37 yuan, and the increase ratio was 0.939%. This was the second increase in holdings during the year.

Actual controllers and executives actively increased their holdings, demonstrating confidence in the company's development. Following the increase of the actual controller's holdings by 500,000 shares in May '23, on December 13, the actual controller once again increased its holdings of the company by about 2,818,000 shares, achieving two increases in holdings during the year. The average price increase was about 34.55 yuan, and the increase ratio reached 1%. If we add the first increase in holdings in August '22, the total increase ratio of the chairman's holdings reached 1.242%, and the average total increase in holdings was 36.93 yuan. In addition, the two executives joined the December 13 increase in holdings, increasing their holdings by a total of 298,800 shares. The company's actual controllers and executives actively increased their holdings of the company, demonstrating management's firm confidence in the company's development.

As the company's basic profit market, the brake disc business has shown results in the expansion of the civil aviation market, and growth can be expected. The brake disc business is an important source of the company's basic market and profit. It has obvious consumables attributes, and military aviation demand is cyclical. As demand for military aviation inventory replenishment increases again, the military aviation brake disc business will experience significant growth in '24, with revenue expected to exceed 150 million yuan in '24. With the increase in autonomous and controllable requirements for civil aviation, the company is actively expanding the application of brake discs in the civil aviation market, with remarkable results. At the beginning of 2022, the company signed a ten-year aviation materials procurement and supply agreement with Hainan Airlines and Xiangpeng Airlines, and revenue leapt from 0-1 in that year. With the recovery of civil aviation and the release of international civil aviation demand, the company's civil aviation brake disc business has entered a period of expansion since '23, and is expected to maintain a relatively rapid revenue growth rate in '24. It is estimated that the revenue of civil aviation brake discs will reach 180 million yuan in '24. Furthermore, during the Dubai Air Show, the company signed procurement and customized development agreements with customers in Africa, Central Asia and other regions for the procurement and customized development of wheels, brakes and other products for aircraft models such as Airbus and Boeing, and it is expected that the brake disc business will continue to grow.

The landing gear business has reached an inflection point, and revenue will reach 1-10. In 2021, the company completed the delivery of landing gear landing systems, and achieved a leapfrog transformation from a component supplier and material supplier to a system supplier and overall solution provider (0-1). Currently, the company's various types of landing gear products have reached important application points and entered the stage of scientific research or small-batch trial production. The Tianjin Quanshun landing gear surface treatment production line of the holding company Sun Company has been officially put into operation, which can guarantee the research and production of landing gear for large aircraft such as the Boeing 747, Airbus 380, COMAC 929, and military aircraft. As demand for new models increases, we expect the company's landing gear business to experience explosive growth in the next two years (1-10), with revenue expected to reach 280 million yuan in 2024.

The testing business is ready to go. The company's inspection business bottomed out in '23. With the implementation of new management and the commissioning of new projects, the business is expected to rise to the next level in '24, achieving a steady increase in revenue and profit.

Investment advice: Due to factors such as the slowdown in industry demand combined with military price cuts, etc., we lowered the company's profit expectations for 23 years and reorganized the business situation for the next two years. It is estimated that the company's net profit from 2023 to 2025 will be 3.59/48/576 million yuan, EPS will be 1.08/1.45/1.74 yuan, and the current stock price corresponding to PE is 31x/24x/20x. As a leader in the domestic aviation braking field, the company has outstanding core competitiveness. In the future, it will benefit from the batch installation of military and civil aviation and domestic replacement demand. It has broad development prospects and maintains a “recommended” rating.

Risk warning: risk of fluctuations in demand in downstream industries; risk of fluctuations in product prices.