Matters:
The latest revised edition of Annex 10 to the Convention on International Civil Aviation entered into force recently. It includes standards and recommended measures for the Beidou satellite navigation system. China's Beidou system has officially joined the International Civil Aviation Organization (ICAO) standards and has become a common satellite navigation system for civil aviation around the world.
Commentary:
The company has been deeply involved in the field of satellite navigation for many years and helped establish ICAO standards. As an important participant in the Beidou System International Civil Aviation Industry Standardization Foundation Enhancement Working Group, Airborne Enhancement Working Group, and Civil Aviation Electronics Standardization Working Group, the Company is mainly responsible for product development and data support in the fields of foundation, airborne and civil avionics. The company has been deeply involved in the fields of satellite navigation and ground-based enhancement systems (GBAS) for many years. It has developed a variety of related products and has been widely used, laying a solid foundation for participation in the formulation of ICAO standards. In order to accelerate the promotion of ICAO, the company has developed ground equipment and airborne equipment supporting the Beidou/GPS dual mode (GBAS) ground equipment and airborne equipment, and provided extensive test and operation data support. During this period, the company participated in 28 working meetings, more than 50 technical discussions, submitted more than 100 technical documents, and answered more than 2,000 questions, and fully supported and cooperated with the promotion and publication of international standards for civil aviation in Beidou. The Beidou system realizes market-based, industrialized, and international application in the field of civil aviation. It also helps the company expand the market boundaries of navigation services and open up space for market development.
Keep up with the development trend of equipment informatization and achieve a steady increase in equipment share in traditional fields. The company is a leading enterprise in the field of military wireless communication. It has a rich product matrix, including wireless communication terminal products and system products such as handheld, backpack, vehicle, airborne, shipborne, and missile, etc., to achieve coverage in a wide range of fields from shortwave and ultra-short wave to satellite communications. The company closely followed the development trend of equipment informatization and carried out pre-research work on next-generation communication technology in various fields. Through a steady layout, the company achieved a steady increase in equipment share in traditional fields. At the same time, it expanded fields such as scattered communication, individual communication, unmanned communication and big data applications through bidding, and realized new customer development for various system products in various fields, expanding customer boundaries and product boundaries, and is expected to become the company's future performance growth point.
Continued use of technological advantages is expected to expand market size and increase market share. In the field of civil communications, the company continues to be deeply involved in the field of railway wireless communication and continues to exert its technical advantages in this field. Currently, self-developed wireless communication equipment has been successfully used in high-speed rail trains such as the “Fuxing” and “Harmony” and new heavy-duty locomotives. In the first half of the year, the company actively developed a new generation of rail transit wireless communication products to achieve technological breakthroughs where it is difficult to integrate railway broadband mobile cluster business systems with railway business. The research results have been applied in batches in heavy-duty railways such as China National Energy Group's Shuohuang Railway, Baoshen Railway, and Shaanxi Coal Chemical Group's Jingshen Railway, steadily expanding market coverage, which is expected to promote innovation and high-quality industrial development in the company's civil wireless communication field.
Investment suggestions: We expect the company's 2023-2025 operating income to be 41.99, 52.13, and 6.504 billion yuan, net profit of 7.79, 10.49, and 1,379 billion yuan, corresponding EPS of 1.01, 1.36, and 1.79 yuan. Referring to comparable companies and giving the company a PE valuation of 25 times in 2024, the target price is 33.98 yuan, and the target market value is 26.235 billion yuan, maintaining a “strong promotion” rating.
Risk warning: Product development progress falls short of expectations, and customer procurement progress falls short of expectations.