The company issued the “Notice on the “Double Improvement of Quality Return” action plan and actively implemented the “Double Improvement of Quality Return” action plan through four measures.

The company has taken many measures to actively implement the “Double Improvement of Quality and Return” action plan. In order to establish an investor-based concept and promote the improvement of the company's quality and investment value, the company has formulated a “double improvement in quality return” action plan. The specific measures include four aspects: 1) Focus on the main business and broaden the development circuit: on the one hand, the company focuses on the field of intelligent measurement and control, vigorously develops aviation, military, sensor control, intelligent transportation and other businesses; on the other hand, it actively lays out emerging business fields to develop markets such as automotive electronics, robotics, digital intelligence, and new energy vehicle safety inspection. 2) Strengthen R&D investment and innovation-driven development: In 2023, R&D investment intensity will exceed 10%, and R&D personnel will account for 25%. Up to now, there are 305 patents, and more than 70 new patents and software books are added every year. 3) Improve corporate governance and protect shareholders' rights and interests: The corporate governance system is continuously improved. We attach great importance to communication with investors and protect the legitimate rights and interests of investors. Every year, we give back to all shareholders through cash dividends to raise the level of investor returns. 4) Improve the quality of credit disclosure and continue to standardize operations: Since listing, the company has fulfilled its information disclosure obligations according to law and regulations, and has been rated A by the Shenzhen Stock Exchange for 12 consecutive years. In the future, the company will continue to adhere to the investor-oriented concept and actively implement the “Double Improvement of Quality and Return” action plan to promote the long-term health and sustainable development of the company.

The performance forecast was released, and the overall operating results for 2023 are clearly under pressure. According to the “2023 Performance Forecast” issued by the company, net profit due to mother is expected to be 84.8 million yuan to 113.8 million yuan in 2023 (down 41% to 56% year on year), and net profit without return to mother is expected to be 72.8 million yuan to 106.8 million yuan (down 40% to 59% year on year). The overall operating performance of the company this year is clearly under pressure. The decline in performance is mainly due to: 1) Military: Due to factors such as changes in aviation and military industry policies, the company's aviation and military business was greatly impacted, and revenue and profit margins were drastically compressed; 2) Also, due to insufficient demand in the international and domestic markets, the business performance of the company's core businesses such as sensor control fell short of expectations.

Asset injection is progressing steadily. According to the “Report on Issuance of Shares to Purchase Assets and Related Transactions (Draft)” (Revised Draft)” issued by the company, the company plans to issue 2,086,021,877 shares (accounting for 77.93% of the total share capital after issuance, and the total share capital will reach 2,677 billion shares) to purchase 100% of Aviation Industry Chengfei's shares held by Aviation Industry Group. The share issuance price was adjusted to 8.36 yuan/share after interest. The valuation value of Chengfei's 100% equity in the aviation industry was adjusted to 24.024 billion yuan. China's exclusive capital of 6.585 billion yuan was not included in the price scope of the transaction. After deducting the exclusive state-owned capital reserve, the price of 100% of the aviation industry's shares in this transaction was 17.439 billion yuan. The scope of aviation industry Chengfei's consolidated financial statements includes the six subsidiaries of Aviation Industry Guifei, Guifei Design Institute, Aviation Industry Changfei, Chengfei Civil Aircraft, Chengfei Aviation Manufacturing, and Chengfei Conference. After the transaction is completed, Aviation Industry Chengfei became a wholly-owned subsidiary of the company. The company will add the development and production business of complete aviation equipment and accessories and focus on the main aviation business. The scale of revenue and profit will expand significantly, enhance the company's resilience to risks and core competitiveness, and enhance long-term profitability.

Profit forecast: Considering the influence of factors such as aviation and military industry policy changes and market demand, we lowered the company's profit forecast and predicted that the company's net profit for 2023-2025 would be 95 million, 133 million, and 162 million, respectively, and corresponding PE valuations would be 261, 186, and 153 times; according to the revenue method evaluation results disclosed in the announcement, the company's net profit to mother for 2023-2025 is estimated to be 2,682 billion yuan, 2,770 billion yuan and 2,513 billion yuan respectively. 41-45 times, maintaining the “Highly Recommended” rating.

Risk warning: Major asset restructuring falls short of expectations, and reform progress falls short of expectations.