Introduction to this report:

The Central Economic Work Conference listed the low-altitude economy as a strategic emerging industry. Huasheng Group has rich experience and deep technical accumulation in this field. The group is also actively expanding business areas such as provincial and municipal system construction and drone operation and maintenance.

Incidents:

The Huashi Civil Aviation Design and Research Institute was interviewed by China Communications News to put forward opinions and suggestions on the low-altitude economy.

Commentary:

The low-altitude economy involves fields such as aircraft and infrastructure operations, and is classified as a strategic emerging industry. (1) Maintain HuaShi Group's increase in holdings rating. Maintain the 2023-2025 EPS forecast of 1.03/1.16/1.25 yuan, an increase of 3/13/ 8%. Maintain the target price of 13.1 yuan, corresponding to 11.3 times PE in 2024. (2) Low-altitude economy refers to a comprehensive economic form where various low-altitude flight activities of various manned and unmanned aerial vehicles are used as traction, and radiation drives the integrated development of industries in fields such as aircraft and related infrastructure operations. (3) At the end of 2023, the Central Economic Work Conference listed the low-altitude economy as a strategic emerging industry. The 2024 government work report also indicated that new growth engines such as the low-altitude economy should be actively built. Furthermore, the low-altitude economy was mentioned in government work reports in many provinces across the country. (4) According to the Guangdong-Hong Kong-Macao Greater Bay Area Digital Economy Research Institute's white paper on the low altitude economy, the overall contribution value of the low altitude economy to the national economy will reach 3 trillion to 5 trillion yuan by 2025.

HuaShi Group has rich experience and deep technical accumulation in this field, expanding drone operation and maintenance, etc. (1) The company has successively provided engineering consulting services for 113 transportation airports and 18 general airports. (2) According to the company's official account, the company has rich experience and deep technical accumulation in the field of low-altitude economy, and provides a full range of consulting services including low-altitude policy consultation, airspace planning, standard formulation, development strategy planning, and institutional mechanism construction. (3) The Group is also actively expanding business areas such as provincial and municipal system construction, drone operation and maintenance, and is committed to improving the level of post-project operation services, and developing diversified application scenarios and service flight operations. (4) In terms of data governance, the Group is committed to developing a system data center to provide scientific decision support for the planning and design of low-altitude economic infrastructure. (5) China Construction Aviation, a joint venture with Nanjing Zhongshanyuan Aviation Technology Co., Ltd., was established in 2016, involving applications such as drone road area inspection.

AI design products have significantly improved solution design efficiency, and related products are still being iteratively upgraded. (1) The full-process digital platform built by the company covers the entire life cycle of infrastructure such as survey, design, construction, and maintenance, and has functions such as full-scene digitalization, digital twin, cloud design, and SaaS services.

(2) AIRoad highway design system improves scheme design efficiency by 8-10 times and increases overall scheme design efficiency by 20-30%. (3) On January 10, 2024, Jiangsu Dinoni released the “Integrated Solution for Road Solution Design and Simulation” AIRoad+VRRoad, which eliminated data silos between design and simulation.

The field of autonomous driving mainly involves vehicle-road collaboration software and hardware products, and the repurchase of company shares boosts confidence. (1) Jiangsu Yuanchang Technology, which was jointly established with Shenzhen Youjiao, mainly includes the three product lines of “Smart Park, Smart Inspection, and Smart Driving”. The products include roadside V2X software and hardware, closed scene autonomous driving kits, etc. (2) On January 5, 2024, it was announced that it plans to repurchase 40 to 80 million yuan, and 271.2 billion yuan had been repurchased as of February 29.

Risk warning: macroeconomic policies have been tightened beyond expectations, infrastructure investment has fallen short of expectations, etc.