Company profile

The company is the only listing platform for CLP's 28 companies. Its main business is civil aviation management, road traffic, urban governance and enterprise-level informatization. The company continues to invest in R&D to strengthen its business capabilities. In 2023, the company achieved operating income of 1.676 billion yuan, a year-on-year increase of 6.35%; net profit to mother was 0.132 billion yuan, an increase of 47.6% over the previous year. The company was first listed on June 28, 2023. A total of 40,870,000 shares were issued, the initial price was 25.28 yuan, and the capital raised was 1.033 billion yuan. Raise capital to invest in next-generation smart civil aviation platforms, smart traffic control platforms, public credit big data support and service platforms, and R&D center construction projects, and supplement liquidity. The company actively lays out the low-altitude air traffic control business, which will contribute to the second growth curve.

Investment logic:

A leading civil aviation management company with three drivers to help grow. According to the company's prospectus, the company's main system accounts for 63.64% of air traffic control users, and the core technology is outstanding. The company will benefit from three major industry changes: 1) on top of the existing 8 air traffic control centers, it is expected that 9 additional regional air traffic control centers will be added; 2) domestic replacement and expansion of 8 major regional air traffic control systems; 3) replacement and upgrading of the original system. According to the company's prospectus, the market size of China's air traffic control system industry in 2022 will be 5 billion. According to our estimates, the air traffic control investment scale is expected to reach 11.9 billion in 2030.

Airport information systems have increased significantly in volume and price. The company's airport information technology products have benefited from domestic replacement of 42 hub airport information systems and accelerated informatization construction of 217 small and medium-sized airports. From originally providing information technology products for apron towers to later providing a complete set of integrated airport information systems (IIS), the supply value has increased significantly.

Low-altitude air traffic control first released the bureau, contributing to the second growth curve. Traditional civil aviation management systems and low-altitude management systems are similar in technology, and the company is actively developing low-altitude air control and other businesses. In September 2022, the company won the bid for the Civil Aviation Management Cadre College Low Altitude Project with an amount of 78.88 million yuan. In January 2024, the company won the bid for the low altitude project in Anhui Province, amounting to 9.55 million yuan. According to our estimates, the long-term market for air traffic control systems is broad and is expected to reach 175.3 billion.

Profit forecasts, valuations, and ratings

The company is expected to achieve operating income of 1.98 billion/2.38 billion/2.85 billion yuan in 2024-2026, +18.4%/+20.1%/+19.7% YoY, net profit of 0.16 billion/0.2 billion/0.25 billion yuan, +20.7%/+25.0% YoY, corresponding EPS of 0.98/1.22/1.53 yuan. The company's civil aviation management business is developing steadily, and the low-altitude economy gave it a second growth curve. The business growth rate was strong. The company was valued 68 times in 2024, corresponding to a target price of 66.30 yuan. The first coverage gives an “gain” rating.

Risk warning

The development of the civil aviation management business fell short of expectations; the progress of low-altitude construction fell short of expectations; industry competition intensified; the risk of lifting the ban on restricted shares; and the risk of accounts receivable and payable turnover days was too high.