Anti-crash seats are equipped with eVTOL space: we believe that the company has a first-mover advantage when entering a low-altitude circuit. 1) The application scenarios of the company's products are highly compatible with eVTOL. In 2035, the company's anti-crash seats can support the global market space or exceed 16 billion yuan. 2) The company's range of products and services can cover the entire life cycle of eVTOL production and operation, and is expected to become the core supplier of eVTOL machine manufacturers. 3) Substantial progress has been made, and some customers have entered the late stage of business negotiations on specific products.
Military products: Steady increase in revenue in the military aircraft sector: The company has 95% survival rate seat technology, and the domestic market share of anti-crash helicopter seats is extremely high. We anticipate that the military industry will have sufficient orders for helicopters/transport aircraft in 2024-2027, which is expected to bring a steady increase in revenue for the company. The company's business of communication and navigation equipment, helicopter simulation training systems, measurement, control and security equipment will also generate a steady increase in revenue along with military orders. In addition, the company invested 500 million yuan to build an aviation equipment R&D and production base in Tianjin to improve raw materials and production and processing capacity.
Civil products: New opportunities for large domestic aircraft: The company has excellent maintenance capabilities, and the gross margin of business is at a high level in the industry. The market share is expected to continue to increase as civil aviation transportation recovers. The C919 has entered the mass production and delivery stage, and has received more than 1,200 orders, and the localization process has been accelerated. The company's self-developed kitchen and bathroom equipment has broken foreign monopolies to replace domestic production. Currently, it is the only domestic supplier. The company's supporting space for kitchen appliances in large aircraft is expected to exceed 9 billion yuan in 2024-2030. In addition, the company's fund-raising projects enhance the comprehensive strength of aviation maintenance, composite manufacturing, measurement and control, and ground support businesses, and will further open up room for growth in the civil sector.
Investment advice: The company has obvious advantages in the anti-crash seat business. The military products business contributes to a steady increase in revenue, and the large domestic aircraft and low-altitude economy have opened up a new growth curve. We expect the company to achieve operating income of 981/12.08/1,404 billion yuan and net profit of 1.42/1.79/217 million yuan in 2024-2026. The corresponding PE was 36.12/28.63/23.54 times, respectively. It was covered for the first time, and a “gain” rating was given.
Risk warning: Military aircraft order fulfillment falls short of expectations, competition in the civil aviation maintenance market intensifies, and the eVTOL technology iteration process falls short of expectations