Report in brief:
National military drone team, the only listed drone company within the Aviation Industry Group. The company focuses on the systematic development of large-scale fixed-wing long-flight drone systems, and has integrated drone design, R&D, manufacturing, sales and service capabilities. The company's drone system products include pterosaur series drone systems such as Pterosaur-1, Pterosaur-1 D, and Pterosaur-2. The company's products have set many records in the field of military export and trade, and have achieved excellent results in actual overseas scenarios. Currently, Pterosaur series drones rank second in the world in the global market share of integrated drones.
The resurgence of domestic and foreign trade opens a new chapter in the company's development. The foreign trade business has laid a solid foundation for the company's development. In the context of local regional conflicts, the global drone arms trade market has become more active. As the main model of national drone exports, the “Pterosaur” has been exported to many countries along the Belt and Road. We believe that Pterosaur drones will use their superior performance and maturity to further increase the share of the foreign trade market and achieve rapid growth in the company's main foreign trade business. On the domestic side, the company addressed the country's major needs and provided new solutions in the field of meteorology and major emergency situations. The rapid development trend of the drone industry is becoming more and more clear. The Air Force recently organized a seminar on drone construction, development and application in Beijing, inviting many domestic research institutes, military industry groups, local universities, private enterprises, etc. in the field of drones to exchange experiences and practices. We believe that the drone industry will become an important development direction in “increasing the proportion of new types of combat forces in new domains, accelerating the development of unmanned intelligent combat forces, and coordinating the construction of network information systems.”
Investment in R&D continues to be increased, and multiple pipelines are being developed to enrich the product matrix. The company's R&D expenditure rate in 2021 was 6.4%, and R&D expenses were 160 million yuan. Currently, the high-performance Pterosaur-1 E drone has made its first flight and entered the scientific research test flight stage, and will compete on the same stage with the world's most advanced products. At the same time, the company accelerated the implementation of fund-raising projects and initiated the development of Pterosaur-2 Development Type II (Pterosaur-3).
According to the company's prospectus, Aviation Industry Cheng Fei will complete the transfer of all production, R&D, and other assets and business related to the Yunyin (Pterosaur-10) drone within 12 months after the inspection work of the drone is completed by the National Defense Administration of Science, Technology, and Industry, and the company's product richness and competitiveness will be further strengthened.
Investment advice: As the main equipment on the modern battlefield, drones have both consumable attributes and strategic reserve value, and the company will fully benefit from major trends in internal and external industry development. We forecast that the company's revenue for 2022-2024 will be 2,773/33.32/4.167 billion yuan respectively, net profit of 3.61/5.73/765 billion yuan respectively, corresponding to EPS of 0.53/0.85/1.13 yuan/share, corresponding to PE100.29/63.1/47.3X, first coverage, and a “buy” rating.
Risk warning: foreign trade competition intensifies, profit forecasts and valuations fall short of expectations, delivery falls short of expectations