The core listing platform under the Jiuyuan Aerospace Academy is in an advantageous position in the field of aerospace electronic information business. The company was formerly known as Wuhan Cable (Group) Co., Ltd., and in 2016, the company acquired the technical improvement assets of China Aerospace Times Electronics Company and 100% of the shares of Aerospace Electric Group Co., Ltd., and basically achieved the overall listing of Aerospace Era enterprise assets. The company's main business is R&D, production and sales of products such as aerospace electronic information and unmanned system equipment. It has formed a technological innovation organization pattern with clear hierarchies and coordinated functions, and has a relatively complete multi-level technological innovation organization system. Currently, the company has 15 holding subsidiaries, a national engineering research center, and a national enterprise technology center. It is one of the few domestic enterprises that have the qualifications and ability to undertake supporting production tasks for various aerospace and model products. Aerospace military products are the company's main source of profit, accounting for more than 70% of revenue in the past three years. At the same time, unmanned system equipment products are growing rapidly, and the share of revenue and profit contributions is increasing year by year.

Demand for Stararrow is driving rapid growth in aerospace products, and the three major segments support the cornerstone of the company's performance. 1) The company's inertial navigation business has a wide range of application scenarios, and is deeply supporting major national aerospace projects and low-orbit satellite constellations. As low-orbit satellite networking accelerates, demand for launch vehicles and satellites is expected to be released in batches; major national deep space exploration projects are progressing rapidly, and deep space inertial guidance equipment is facing huge market demand. The company has significant card advantages in the aerospace field, and fund-raising projects help with many key technical issues; 2) The company's laser communication terminal products are the core of interplanetary communication, and the company has complete technology and mature products. We expect future laser communication terminals to have about 152.8 billion market space; 3) The company's measurement and control communication business is a key part of aerospace engineering, covering launch vehicles, satellites and space probes. The company maintains a high support ratio for related projects and is expected to generate stable revenue in the future. The growth of the company's aerospace products is expected to be highly deterministic, which is an important support for the company's future performance.

Unmanned systems benefited from the release of demand for informatization and intelligence, and the company's second growth curve ushered in rapid growth. Relying on the Unmanned Systems Center of the 9th Aerospace Academy, the company laid out unmanned systems research and development in advance. Aerospace Feihong has been deeply involved in the development of drone systems for many years, and has formed a complete industrial chain. Defense informatization has accelerated the release of demand for military drones; strong domestic and foreign demand has spawned the “Feihong” series drone release; Feipeng's “Low Altitude +” drone layout opens up future growth space in the civilian field; the “Feiteng” series cruiser integrates guided ammunition and drone advantages, and has a good response in overseas military trade markets. At the same time, the manufacturing cost is low to facilitate large-scale mass production, and there is plenty of room for future market growth.

Covered and given a “buy” rating for the first time. As one of the few domestic enterprises with the qualifications and ability to undertake supporting production tasks for various aerospace and model products, the company has benefited from the release of downstream demand in the aerospace electronic information industry. The company is deeply involved in the main aerospace electronics industry, and has always maintained a leading domestic level in related industries. At the same time, it is actively expanding unmanned system equipment and developing in depth in various fields. We expect the company's 2024-2026E net profit to be 0.62, 0.75, and 0.93 billion yuan, respectively, corresponding to the current stock price 2024-2026E, which is 56/46/37 times PE, respectively. Representative companies with navigation and communication products, such as Haige Communications (satellite communications, satellite navigation), Chip Electronics (inertial navigation), and Guobo Electronics (satellite communications) were selected for comparison. Comparable companies' average PE values for 2024-2026E were 70/51/39 times, respectively. The company's PE valuation in 2024 was lower than the industry average. Considering the steady increase in demand for aerospace and military products combined with rapid growth in the second growth curve, the company's performance is expected to maintain rapid growth in the future, so it was covered for the first time and given a “buy” rating.

Risk warning: Aerospace and unmanned business demand falls short of expectations, civil goods business development falls short of expectations, and risk of declining gross margin.