Key points of investment

The low-altitude economy enters the government work report for the first time, and the eVTOL industry is expected to explode

In October 2023, the “Green Aviation Manufacturing Development Outline (2023-2035)” proposed striving to put electric aircraft into commercial application by 2025 and eVTOL to achieve pilot operation; on March 5, 2024, the government work report also mentioned the low-altitude economy and listed it as a “new growth engine”, and the industry is expected to achieve a new round of breakthroughs; on March 22, 2024, the Fengfei V2000CG unmanned aerial vehicle system obtained a type certificate (TC) issued by the CAAC, becoming the first in the world to be awarded TC An eVTOL aircraft of tonnage or above. Low-altitude economic policies are frequent, industrialization is accelerating, and the eVTOL industry is expected to explode.

Deeply lay out the field of electric aviation, perfect product matrix and remarkable first-mover advantage

The company has been in the field of electric aviation for a long time, starting in 2019, and has gradually formed a “3+1" product layout, including small, medium and high power grade products and a set of airworthiness standards for civil aviation, which are mainly used in the eVTOL and drone fields. On March 16, 2023, the low-power typical specification (17KW electric power system) completed all bench and iron bird tests, achieving an important milestone. In May, the 70kW high-power aeronautical electric power system successfully passed the expert inspection of the Ministry of Industry and Information Technology, and in June, the 30kW channel electric power system completed ground test tests, and all indicators met the expected requirements. Electric drive technology requires higher reliability than vehicle standards in the aviation field, and places more emphasis on weight reduction. The company has developed cutting-edge technology in the development of electric drive algorithms and new materials, and has a remarkable first-mover advantage.

Join hands with partners such as COMAC, Wanfeng Aowei, and Shanhe Star Airlines to jointly promote industrial development

The company has been active in the field of electric aviation for a long time. It has many customers in the field of electric aviation, and has carried out in-depth cooperation with well-known domestic and foreign companies and research institutes such as COMAC, Shanhe Star Airlines, Wanfeng Aowei, the Academy of Aviation Sciences, and Rolls-Royce. On December 2, 2020, Wolong Electric Drive Group Co., Ltd. and Zhejiang Wanfeng Aowei Steam Turbine Co., Ltd. formally signed a strategic cooperation agreement in Wanfeng Aviation Town. The two sides agreed to strengthen cooperation in the application and promotion of magnesium alloy materials in the electric aviation industry, wheel motors, and the new energy electric drive industry. In September 2022, the company and COMAC Beijing Research Center joined hands in research and development to jointly build the “Aeronautical Electric Power Systems Innovation Center” to promote the commercial application of electric aviation technology. On October 11, 2023, the “Aeronautical Electric Power Systems Division” jointly built by the company and COMAC Beijing Research Institute was officially inaugurated; in addition, the company and the China Civil Aviation Research Institute jointly built a “joint laboratory”.

Profit forecasting and valuation

The profit forecast was lowered and the “buy” rating was maintained. The company is a global leader in industrial motors, and is deeply involved in the field of electric space with leading mainframe companies. Considering the intensification of competition in the EV motor sector, we lowered the company's profit forecast for 23-25. The net profit for 23-25 is 10.97, 13.02, and 1,432 billion yuan (14.85, 18.08, and 2,069 billion yuan before the 23-25 reduction), corresponding EPS is 0.84, 0.99, and 1.09 yuan/share. The PE corresponding to the current stock price is 20, 17, and 15 times, respectively. Maintain a “buy” rating.

Risk warning

Policy standards fell short of expectations; customer development progress fell short of expectations; product development and promotion fell short of expectations.