Aerospace Electronics specializes in leading scientific research and production consortia, taking advantage of the platform to independently innovate multiple businesses and integrate aerospace electronics. It is the only listed enterprise platform under the 9th Academy of Aerospace Science and Technology (China Aerospace Times Electronic Technology Co., Ltd.). After many asset restructuring and integration, the overall investment of enterprise assets under the 9th Aerospace Academy was basically achieved in 2016. The company has concentrated the superior technical resources of aerospace electronics core professional supporting institutions, and is leading the industry in the four major aerospace electronics business segments of measurement and control communications, inertial navigation, integrated circuits, and high-end electromechanical components. At the same time, it continues to expand unmanned equipment tracks in new quality and new domains, and its core competitiveness continues to increase.

Since the asset injection, the company has continued to increase R&D investment and talent attraction to strengthen its technological advantage. Revenue has grown steadily, and gross margin has shown an upward trend. In 2023, gross margin reached a new high since the overall listing, and high R&D investment helped the company welcome the upward trend.

Space space: Taking advantage of commercial space, and building the cornerstone of performance with model support, the low-orbit satellite giant constellation is currently the main direction of satellite internet construction, which will open up new requirements for satellite communication. In addition to satellite communications, general low-orbit satellite platforms can carry diverse payloads and have very broad application prospects in the field of aerospace safety.

Under the resonance of space safety and satellite communication requirements, China's low-orbit giant constellation was immediately followed up. According to estimates disclosed by the International Telecommunication Union (ITU), China's demand for constellation construction in the next 5 years will reach more than 7,000. Driven by commercial aerospace development, the supporting space for electronic device products in both rocket and satellite fields can reach more than 188/29 billion yuan in 2028, respectively. The company relies on the 9th Aerospace Academy, is deeply tied to the aerospace “national team”, and enjoys the exclusive advantage of supporting cards for aerospace electronic equipment. Strong demand in the aerospace industry has led to the release of the company's performance.

Unmanned: Deeply involved in the cross-domain expansion of multiple military branches in the middle and near range, and the dual cycle of domestic and foreign trade have driven the boom military drones. They have been integrated into all stages of modern warfare, and have become the main combat equipment in modern and future wars. Among them, promoting the embedding of small and medium-sized consumable drones in battlefields to meet the combat requirements of forces at all levels has become one of the distinctive features of countries developing and using unmanned equipment. The company is a domestic military drone mainframe manufacturer. The core technology and products have strong market competitiveness, and have formed a complete product system. At the same time, the company has taken root in the Army in the field of unmanned equipment, expanded the high-end air and navy market horizontally, actively entered the field of loyal wingjets and underwater unmanned underwater vehicles, and relied on the company's technical advantages in electronic equipment integration and flight control system development to create the second driving force for the company's performance growth. In addition, the company's drone products have been exported to more than 10 overseas countries, and new breakthroughs have been made in market development. Commercial pricing for military trade is flexible, profit margins are high, and domestic and foreign trade demands are jointly driving the company's prosperity.

Pragmatists: Divesting inefficient assets into the main defense business, striving to reform and gather vitality, efficiency, and the ultimate purpose of state-owned enterprise reform is to strengthen the position of state-owned enterprises in the economic system and enhance overall vitality and efficiency. Under the unified leadership of the science and technology group, the company actively responds to “top-level design” and deploys the national reform game in all aspects to anchor the goal of a space power and strengthen management and operation. At the level of asset integration, in 2023, the company announced plans to divest the non-core civil cable business and continue to focus on the development of the main defense industry. At the same time, it is also set to raise 4.1 billion yuan for research and industrialization projects in core industries such as measurement and control communications, inertial navigation, and unmanned systems to integrate and gather the internal assets of the Jiuyuan Hospital, improve the industrial chain layout, and build an industrial development ecosystem. In terms of internal reforms, in 2020 and 2021, the company will launch equity incentives for the subsidiary and Sun Company responsible for developing the unmanned systems business, respectively, to bind core management and technical personnel, which will further stimulate the vitality of the talent team in the field of unmanned systems and promote the improvement of the company's innovation, efficiency and profitability. Furthermore, the company actively embraces digital intelligence, promotes the transformation of scientific research and production from model-driven to product-driven, explores new application scenarios for existing products, integrates product lineages, optimizes production efficiency, reduces pressure “two gold”, and improves the quality of the company's management.

Risk warning

1. Uncertainty about the pace and scale of equipment orders placed after the 14th Five-Year Plan; 2. Uncertainty about the progress and results of the company's asset integration plan; 3. Risk that profit forecasts are unfounded or fall short of expectations due to downstream demand or fluctuations in the company's production and operation.