The company released its report for the first quarter of 2024. During the reporting period, the company achieved revenue of 3.814 billion yuan, a year-on-year decrease of 14.5%; net profit attributable to shareholders of listed companies was 143 million yuan, a year-on-year decrease of 21.43%; net profit attributable to shareholders of listed companies deducted 122 million yuan from non-recurring profit and loss, a year-on-year decrease of 29.57%. Basic earnings per share were $0.043.

2024Q1 performance declined briefly. 2024Q1 achieved revenue of 3.814 billion yuan, a year-on-year decrease of 14.5%; net profit attributable to shareholders of listed companies was 143 million yuan, a year-on-year decrease of 21.43%. The main reason is due to rising prices of major raw materials such as copper and aluminum and intense competition in the cable industry, which led to a decrease in revenue from civilian products and a decrease in net profit during the reporting period. Furthermore, due to the decline in delivery of aerospace products in the first quarter compared to the same period of the previous year, the revenue and net profit of aerospace products decreased compared to the same period of the previous year.

Backed by the Nine Academy of Aerospace Science and Technology, strong R&D capabilities have created a leading position in the field of aerospace electronics. The controlling shareholder of the company is China Aerospace Science and Technology Corporation Jiuyuan, a large-scale research and production consortium in the field of aerospace electronics.

The company promotes R&D work in an orderly manner, accelerates the expansion of the professional technical system, focuses on specialized fields such as inertial and navigation technology, measurement and control communication and network information, microelectronics, mechatronic components and sensing systems, unmanned systems and command control, payloads, etc., and continues to carry out key technical research and focus on building an original technical strategy source.

Research institutes under the Ninth Aerospace Academy have excellent technical strength in their respective fields. These research institutes have the potential to transform military technology to civilian use, and will be further unleashed as technology continues to advance and market demand continues to expand, showing broad prospects for industrialization.

Asset optimization, focus on the main business. The company is actively promoting strategic adjustments in the asset structure to achieve a deep focus on the main business, thereby improving the overall quality of development. The company plans to publicly list and transfer 51% of Aerospace Electrician's shares. We believe that this divestment will help the company to more clearly position its main business, allocate resources more rationally, further enhance the company's competitiveness in core areas, and improve the quality of the company's development.

Hangzhou Aerospace plans to transfer land use rights at No. 968 Shangtang Road, Gongshu District, Hangzhou through public listing on the Beijing Property Exchange. The aim is to improve the efficiency of the company's asset utilization, optimize asset layout, and provide a more stable asset foundation for the company's long-term development.

The holding subsidiary Space Age Feihong took advantage of the “low-altitude economy” and spread its wings. With the continuous expansion and deepening of the low-altitude economy, the Space Age Feihong continues to launch innovative products, injecting new vitality into the development of the industry. On April 24, 2024, the FP-98 “Leo” large-scale drone developed by Aerospace Times Feipeng Co., Ltd., a joint shareholding subsidiary of SF Express, carried out a cross-sea branch logistics mission for the first time since receiving TC, achieving a breakthrough in the field of drone logistics transportation and opening up new application scenarios for the development of the low-altitude economy. At the same time, Feihong's other star product in the space age — the “Sagittarius” FP-981C-BE electric vertical take-off and landing drone system (EVTOL), has also made significant progress. The application for the Type Certificate (TC) was accepted by the East China Regional Administration of the Civil Aviation Administration of China, which is one step closer to being officially put on the market. With its unique vertical take-off and landing capability and efficient and stable flight performance, this drone system has broad application prospects in urban air traffic, emergency rescue, etc.

The four major aerospace electronics products have benefited from the rapid development of the aerospace industry, and the low-orbit satellite industry chain has exploded in growth momentum.

Measurement and control communications, inertial navigation, integrated circuits, electromechanical components, etc. are the company's traditional strengths and specialties. It has always maintained a leading domestic level in related industries, and has maintained a high supporting ratio. The market share is basically showing a steady upward trend. It is ushered in unprecedented development opportunities, benefiting the core from the rapid development of China's aerospace industry. The explosion of the low-orbit satellite industry chain is expected to bring continued orders. The company will give full play to its advantages in these fields, actively explore the market, increase market share, and inject new momentum into the company's continuous development and growth.

Maintaining an “incremental” investment rating: We predict that the company's net profit due to mother in 2024-2026 will be 718 million, 787 million, and 889 million, respectively, corresponding valuations of 37, 34, and 30 times, maintaining the “increase in holdings” rating.

Risk warning: Military purchase orders have fluctuated, and market competition has intensified.