On November 12, 2024, the first day of the 15th China Air Show, the intended order and development cooperation framework agreement for the HH series aviation commercial unmanned transport system were successfully signed at the Zhuhai Air Show site.

Xifei Civil Aircraft actively lays out a low-altitude economy, and the HH Series has signed 50 sets of intended orders. At the 14th China Air Show held in November 2022, Xifei Civil Aviation (the company's shareholding ratio is 31.58%) and Zhongtong Express signed a large-scale commercial unmanned transportation system development cooperation agreement signing ceremony. On June 12, 2024, the HH-100 aviation commercial unmanned transport system verification aircraft successfully flew for the first time, and Zhongtong Express was invited as a customer representative to observe the site. On November 12, 2024, the first day of the 15th China Air Show, the intended order and development cooperation framework agreement for the HH series aviation commercial unmanned transport system were successfully signed at the Zhuhai Air Show site. According to the agreement, the two sides will serve the field of branch logistics transportation through the HH series aviation commercial unmanned transportation system, support the construction of a “main line large manned aircraft+large branch line drone+small terminal drone” aviation logistics network, effectively open up new air cargo channels for domestic trunk lines and branch lines, help solve problems such as inconvenient logistics transportation and poor transportation efficiency in remote areas, and help the development of the low-altitude economy. In addition, Xifei Civil Aviation signed a cooperation framework agreement with the Academy of Postal Sciences for the development of HH series aviation commercial unmanned transport systems to cooperate on scenario research, scenario verification, application promotion and technical support for aviation commercial unmanned transport systems to enhance logistics capabilities in cities, remote areas and islands in China.

Related transactions are expected to continue to grow in 2024. According to the “2024 Daily Related Transactions Forecast Notice” issued by the company, the company expects to purchase 24.785 billion yuan from aviation industry group and other related parties in 2024, with an estimated amount of 20.3 billion yuan in 2023, an increase of 22.09%; in 2024, the company expects sales to aviation industry group and other related parties to be 0.746 billion yuan, and the estimated amount to be accrued in 2023 is 0.676 billion yuan, compared with the estimated amount for 23 Compared with the 10.28% increase, the growth rate is somewhat higher than in the same period in 2023. We believe that the company expects changes in related transaction amounts to indicate that the company's downstream demand is currently strong, and the prospects for order growth are good.

Restricted stock incentive programs motivate core employees. On February 15, 2023, the company issued the “Notice Concerning the Completion of Registration for the First Term of the Restricted Stock Incentive Plan”, which granted 13.095 million shares for the first time to 261 incentive recipients, accounting for approximately 0.4730% of the company's total share capital at the time the incentive plan was announced. The grant price was 13.45 yuan/share. In terms of unlocking conditions: ① Based on the company's net profit deducted from mother's net profit in 2021, the 23/24/25 net profit compound growth rate was not less than 15.00%, and not lower than the industry average or 75th quartile value of the target company; ② 23/24/25 EOE (EOE = EBITDA/ average net assets attributable to shareholders of listed companies) was not less than 11.50%/12.00%/12.50%, respectively, and not lower than the same industry average or the 75th percentile of the target company; ③ 2324/25 △ EVA ( The EVA calculation basis is net profit after deducting non-recurring profit and loss) greater than 0. The fee to be confirmed for the initial grant of restricted shares is estimated at $170.366 million.

Profit forecast: The company's net profit for 2024/2025/2026 is expected to be 1.118/1.393/1.708 billion yuan, corresponding to a valuation of 67, 54, and 44 times, maintaining a “highly recommended” rating.

Risk warning: The development and delivery progress of the new model fell short of expectations, and the production capacity release fell short of expectations.