The leading low-altitude infrastructure planning and design leader, with outstanding full-chain service advantages. The company established a civil aviation team in 2015, and its Beijing Civil Aviation Academy has a Class B design qualification for the civil aviation industry. As the chief editor of the industry think tank, the “Civil Aviation Engineering Construction Industry Standard System” and many other standards, it has extensive business accumulation. Since 2024, the company has accelerated the integration of the three major fields of industry think tank+planning and design+industry application, and formed a group low-altitude economy class to vigorously develop the low-altitude economy industry. Currently, it has formed a full-chain service layout from industry planning, standard policy research, to general aviation design consulting, control platform construction, and drone landing and application.

A number of low-altitude benchmark projects have been launched, which are expected to benefit from the increase in demand for low-altitude infrastructure. Since this year, the company has participated in low-altitude development plans at the Jiangsu provincial level, Suzhou/Nanjing/Shaoxing city level, etc., and also undertook various benchmark projects such as Suzhou General Airport Engineering and Taicang Civilian Drone Test Flight Base. Among them, the Taicang project integrated planning and design, supporting construction, and full-chain low-altitude service capabilities for back-end services, including intelligent network construction, air traffic control platforms, and overall plan research (airspace, site research, etc.). It is the first commercial drone test operation base in Suzhou and the second in Jiangsu Province, and has had outstanding influence in the industry. Currently, low-altitude development policies are being introduced intensively, and infrastructure is expected to take the lead in expanding infrastructure as the core of industrial development. We estimate that the scale of low-altitude infrastructure construction is expected to reach 300 billion in 2025, of which the design plan is about 10 billion. Currently, several provinces and cities have issued take-off and landing site/general airport construction plans. It is expected that starting next year, low-altitude infrastructure will usher in a peak construction period. The company is a leading planning leader in China's transportation think tank. It has remarkable advantages in integrated low-altitude business integration, and has a foundation for implementing benchmark projects, which is expected to benefit from the increase in infrastructure demand.

A strategic cooperation agreement was signed with upstream and downstream leaders to transform the layout into a city-level low-altitude flight operator. After the peak of low-altitude infrastructure, we expect that back-end low-altitude route operation and management will become the leading core of low-altitude design competition for the market.

The essence of back-end operation is an extension of front-end planning. The design institute can easily enter. At the same time, it is expected that it will rely on air traffic control and operation rights to gradually transform a city-level low-altitude flight supervision platform to create a “DiDi Global Inc Taxi” management system. The business model is expected to be significantly optimized. Recently, the company signed strategic cooperation agreements with upstream and downstream industry chain leaders such as WoFei Aerospace, Rice Information, and Kyushu Group, while deepening exchanges and cooperation with the governments of Nanjing's Qinhuai District and Chengdu Tianfu New Area. It is expected to further consolidate the advantages of the entire industry chain, and there is great potential for transforming low-altitude operation service providers in the future.

The “Car Road Cloud” construction is being implemented at an accelerated pace, and business growth can be expected. On July 5 of this year, ministries and commissions released 20 “car road clouds”

In the list of pilot cities, roadside infrastructure construction has entered a period of rapid development. The total output value of the “car road cloud” industry is expected to reach 2.6 trillion in 2030, of which the scale of roadside infrastructure is about 417.4 billion. The company participated in the editor-in-chief of the country's first smart highway vehicle-road collaborative roadside construction technical guide, developed its own AIoT smart highway product system, and undertook a number of smart highway pilot demonstration projects such as the Wuxi S342, Nanjing S126, and Yangzhou G233, and has rich business reserves. Currently, Beijing, Wuhan and other places have announced large-scale vehicle road cloud integrated infrastructure projects. In the future, as project construction progresses in various regions, it is expected to drive the rapid expansion of the company's “vehicle road cloud” business scale.

The profit quality of traditional main businesses is excellent, and the promotion of debt conversion is expected to drive operational improvements. In recent years, the company's gross margin has increased year by year, and is significantly superior to peers. Cash flow continues to be excellent, and profit quality is excellent. Affected by tightening local capital this year, the progress of infrastructure projects such as highways and railways has slowed down, and the company's revenue performance has been under pressure in the short term. In the future, with the gradual implementation of debt conversion policies, local authorities are expected to free up more capital for infrastructure, and project execution is expected to accelerate. In addition, the company recently won the bid for the Ganyue Canal pre-development project. The project is a national strategic project with a total investment of 150 billion dollars. It is expected to be included in the “15th Five-Year Plan” preparation. The design planning process order is about 3 billion. As a pre-conceivable research participant, the company is expected to undertake part of the bid, which is expected to contribute a significant increase in the overall contract amount.

Investment advice: This year, due to factors such as localized debt, the physical infrastructure workload fell short of expectations, and the company's revenue performance declined. We adjusted the profit forecast. The company's net profit for 2024-2026 is 0.499/0.544/0.59 billion yuan, respectively, -29%/+9%/+8% year-on-year, corresponding EPS is 0.73/0.80/0.86 yuan/share, respectively. The current stock price is 13/12/11 times PE, maintaining a “buy” rating.

Risk warning: Low-altitude construction fell short of expectations, debt conversion fell short of expectations, calculation results were erroneous, etc.