Event e: the company announced its three-quarter report in 2019, with operating income of 274 million yuan in the first three quarters, an increase of 10.54% over the same period last year, and a net profit of 90 million yuan, an increase of 0.32% over the same period last year, corresponding to 0.76 yuan per share.

Comments: (1) the company's operating revenue in the first three quarters increased by 10.54% compared with the same period last year, of which Q3 revenue was 78 million, down 8.46% from the same period last year. The main reason is that the company's airborne suspension / launcher delivery increased in the first three quarters, but slowed down in the third quarter; (2) the company's homing net profit in the first three quarters increased by 0.32% year-on-year, basically flat. Of this total, the net profit of Q3 was 31 million, down 5.50% from the same period last year. The main reasons why the growth rate of homing net profit in the first three quarters is lower than the revenue growth rate includes: ① management expenses increased by 32.01% year-on-year, mainly due to the increase in the cost of board funds and the establishment of holding subsidiaries; sales expenses increased by 9.70% compared with the same period last year, mainly due to the increase in the number of airborne suspension / launcher products delivered; ② R & D expenses increased rapidly by 31.22%, mainly due to the increase in basic research investment in this period. ③ 's other income decreased significantly by 100%, mainly due to government subsidies related to day-to-day business activities received in the previous period, which are not available in the current period. (3) the gross profit margin of ① in the first three quarters increased by 4.57% compared with the same period last year, of which Q3 gross profit margin increased by 7.15% year-on-year to 78.46%. The main reason is that the revenue of aircraft information management and recording system business, integrated test and support system business and military autonomous controllable computer business decreased significantly in the first three quarters, the revenue of airborne suspension / launcher products increased rapidly, and the change in product structure increased the overall gross profit margin; the financial expenses of ② decreased by 19.3%, mainly due to an increase of 4.1975 million yuan in interest income. ③ investment income increased by 12.86 million yuan, mainly due to income from the purchase of wealth management products in the current period; (4) from the perspective of assets and liabilities: at the end of the ① reporting period, the company's monetary fund balance decreased by 78.80% compared with the beginning of the year, mainly because the financial products purchased in the current period were reported as other current assets. At the end of the ② reporting period, the company's net accounts receivable increased by 41.59% compared with the beginning of the year, mainly due to the increase in operating income and the relatively small amount of sales rebates in the current period.

(4) from the perspective of cash flow: the net cash flow generated by the company's operating activities in the reporting period decreased by 24.34% compared with the same period last year, mainly due to an increase of 24.66% in cash paid for goods and services over the same period last year; cash paid to employees and employees increased by 33.50% over the same period last year; and taxes and fees paid increased by 27.05% over the same period last year.

The core technology is deep, and the airborne equipment subdivision is a leading enterprise. The company's main products include airborne suspension / launch devices, aircraft information management and recording systems, integrated test and support systems, military autonomous controllable computers and other aviation equipment products, the products cover armed helicopters, shipborne helicopters, special aircraft, drones and other airborne platforms. The company has a number of invention patents and utility model patents closely related to the company's main business, such as "helicopter turret transmission mechanism", "linear displacement electric steering gear" and "four-link general hanger". Participated in editing two national military standards, and the company's "AC all-electric gun control system" project has won the former Chinese people's Liberation Army General equipment Army Science and Technology Progress Award. The company has broken through the monopoly and blockade of many key technologies of international weapons and equipment, such as airborne weapon launch servo system and airborne all-electric folding system, and is one of the most competitive enterprises in the field of helicopter airborne suspension / launcher of domestic aviation equipment.

There is a broad market space for military and civilian helicopters, and the continuous installation of new models is expected to drive steady growth in performance. The company is the only supplier of airborne equipment such as hanger servo system, turret servo system, radar antenna receiving and releasing device, electric hoisting winch, buoy drop device and so on. In the field of military aircraft, according to "World Air Forces 2019", the current number of military helicopters in China is only 902, which is still a big gap compared with 5429 in the United States, and there is still a lot of room for growth in the future. In the field of civil aircraft, helicopter has become an important guarantee to improve the level of social and public service. According to Rotorspot statistics, as of October 1, 2019, the number of registered civil helicopters in China was 1125, equivalent to 8.48% of the registered number of civil helicopters in the United States. The development of the civil helicopter industry does not match the population and the level of economic development. It is still in its infancy and has a broad space for development.

Investment suggestion: we predict that the annual EPS of the company in 2019-20-21 will be 1.41max 1.66max 1.82RMB, corresponding to PE 29.10max 24.68max 22.58x, covering for the first time and giving the company an "overweight" rating.

Risk tip: the installation of military helicopters is not up to expectations, and the research and development of new products is lower than expected.