Key points of investment:

Asset restructuring upgrades business layout, and emerging industries drive revenue growth. Aerospace Intelligent Equipment is backed by the Fifth Aerospace Research Institute and is mainly engaged in space-borne simulation testing and component support, intelligent warehousing for nuclear engineering maintenance, and intelligent railway inspection services. It has extensive reserves of related technology. The company started with infrared detection technology. After many major asset restructuring and continuous upgrading of its business structure, the company gradually formed a strategic layout for the three major businesses. The products can be applied to space vehicles, nuclear industry warehousing and maintenance analysis, and railway inspection services. In recent years, the company has focused on emerging industries such as aerospace and nuclear industry equipment, and its business has developed rapidly. The company achieved revenue of 868 million yuan in 2023Q1-Q3, an increase of 35.1% over the previous year, and realized net profit of 32 million yuan to mother, an increase of 34.9% over the previous year. In addition, the company continues to increase investment in R&D, and downstream customer resources are of high quality and stable. Along with the fund-raising and expansion of production at Shunyi Space Park, the product structure is adjusted and stabilized. The company's revenue and performance are expected to grow rapidly, and overall profitability is expected to continue to improve.

Aerospace products have penetrated the multi-core sector, and the core benefits of the industry are booming. The company's aerospace products penetrate many upstream satellite sectors, such as attitude orbital control and propulsion subsystems, data management subsystems, ground simulation tests, etc., specifically: 1) In the propulsion subsystem, the company relies on the high-quality assets of the Fifth Academy of Aerospace. Millimeter-class Hall electric propulsion products have a rich spectrum. They have passed in-orbit tests. Based on advantages such as high electric drive ratio and high cost ratio, Hall electric propulsion applications are becoming more widespread, and the product release trend is remarkable; 2) Among the digital control subsystems, the company Xuanyu Space has various SoC2008, SoC2012, and SoC2016 products, including SoC2016 and many models The performance of SIP space-borne computer modules has reached the international advanced level, product barriers are high, and the industry position is leading; 3) In the zi-orbital control subsystem, the company has rapid mass production capacity for micro-nano star sensor products and is one of the few qualified domestic star sensitive suppliers; 4) In terms of ground simulation testing, the simulation test platform developed by Xuanyu Space has been successfully used in aerospace control system ground simulation testing, embedded computer ground testing and data management testing. The downstream market is broad. The company's core benefits from the boom in the industry, and applications in multiple sectors of the aerospace business are expected to accelerate in the future.

Nuclear industry policy guidelines are developing at an accelerated pace, and special robots just need to be adapted. China's nuclear power development gap is obvious. The country's “dual carbon” goals drive superposition policy guidelines, and the nuclear industry is growing steadily. As an important part of the upstream industry, special robots are based on immediate considerations such as personnel safety, etc., and downstream demand has been rapidly released in recent years. The subsidiary Xuanyu Intelligence has deep technical reserves in the two major sectors of intelligent equipment and remote operating devices in the nuclear industry, and has spawned various products such as smart boxes, remote control robotic arms, and wall-climbing robots. Compared with comparable companies in the industry, the average value of the company's single products is high, the competitiveness is strong, and the future market prospects are broad.

In the first tier of the railway safety inspection industry, there is still room for growth in traditional businesses. Railway operation safety inspection systems are the company's traditional business, and the company has always maintained a leading position in the industry. Railway construction is an important part of transportation, and the country has always maintained large investments, and the market space is expected to remain stable. Safety inspection services are in the downstream of the industry. The company's market share is at the forefront of the industry. Relevant technology is constantly being iterated, the business continues to be upgraded, and it is expected to continue to grow in the future.

Covered and given a “buy” rating for the first time. As a core enterprise for aerospace equipment support, nuclear industry, and railway traffic inspection, the company is benefiting from the release of demand in various downstream application fields. Furthermore, as fund-raising projects are put into operation one after another, the company's revenue scale and profitability are expected to continue to increase. We expect the company's net profit to be 1.11, 1.55, and 212 million yuan respectively in 2023-2025, and the current stock price corresponding to 2023-25 PE is 78/55/40 times, respectively. The relevant representative companies Zhenlei Technology (satellite communication operation), Tianyin Electromechanical (star sensor), China Satellite (satellite assembly), and Aerospace Morning Light (nuclear industry supporting equipment) were selected for comparison. The average PE in the 2023-25 industry was 94/66/50 times, respectively, and the company's 2024 PE was lower than the industry average. Considering the rapid development of the company's aerospace business, the rapid pace of third-tier business, and strong external demand combined with the company's fund-raising and production capacity release, future performance is expected to grow rapidly. Therefore, coverage for the first time was given a “buy” rating.

Risk warning: the growth rate of military spending falls short of expectations; risk of technological innovation and application marketization; risk of fluctuating gross margin