Introduction to this report:

On November 13, 2024, the company issued an announcement stating that it had received orders for related tasks from customers, with a total amount of about 0.493 billion yuan. The company benefits from defense informatization construction and foreign trade two-wheel drive, and is expected to continue to grow at a high rate.

Key points of investment:

The target price was raised to $29.85 to maintain an increase in holdings rating. The company benefits from domestic demand and foreign trade two-wheel drive, and its performance is expected to continue to grow. Considering that the demand-side impact will gradually be eliminated, the 2024-26 EPS will be lowered to 0.34/0.43/0.54 yuan (previous value was 0.36/0.49/0.61 yuan). The company is the core supplier of air defense warning radar in China, and demand in the military trade market is urgent. Referring to comparable companies 69 times PE in 2025, the company's target price was raised to 29.85 yuan to increase the holding rating.

After receiving orders from customers, performance is expected to improve. The company issued an announcement on November 13, 2024 stating that it has received orders from customers for related tasks, with a total amount of about 0.493 billion yuan. It is a new type of air defense warning radar product. The order amount accounted for 67.91% of the company's audited revenue in the most recent fiscal year. The smooth fulfillment of the order is expected to improve the company's operating performance in the coming year.

The company benefits from defense informatization construction and foreign trade two-wheel drive to accelerate the cultivation of new quality productivity and expand new fields of air traffic control radar and low altitude. 1) The air defense warning radar market continues to be explored in depth: Air defense warning radars are the core equipment for electronic warfare and information warfare. Benefiting from the modernization of our military, information technology equipment, including military radars, will be the focus of investment in weapons and equipment in the long run. The competitiveness of China's air defense warning radar in the international market is increasing year by year, and foreign trade exports will usher in good development opportunities. 2) Main forces in the field of air defense warning radar: The company's air defense warning radar products have become the main equipment in the field of air defense warning in China. The products have covered many military branches. At the same time, they are actively strengthening exchanges and cooperation with military trade companies, promoting international market development, and promoting product export approval. 3) Actively expand new industrial fields: The company won a bid for a military air control radar supporting equipment development project to enter the first step in the air traffic control radar support field; set up a low-altitude division to broaden the new industrial circuit, actively participate in the demonstration and discussion of local government low-altitude economic development plans, carry out key technical research and new product research and development around the needs of the military and civilian low-altitude markets, and the industrialization of the low-altitude field has been fully accelerated. 4) Comprehensively promote the construction of “New South Lake”: The company's new park located in the Jingzhou National Economic Development Zone is expected to be put into use in the second half of 2024. After commissioning, it will greatly improve the company's scientific research and production infrastructure support capabilities, and raise the level of digitalization and intelligence in manufacturing.

Catalyst: China's demand for advanced radar equipment has been implemented one after another.

Risk warning: The company's new product development progress falls short of expectations, and customer demand falls short of expectations.