Main points of investment:
The leading enterprise of large fixed wing long flight time UAV system in China. China UAV (hereinafter referred to as "the company") is an integrated solution provider focusing on the systematic, multi-scene and full-life of large fixed-wing long-flight time UAV systems, mainly engaged in the design, development, manufacturing, sales and service of UAV systems. The company is the leader in domestic large-scale fixed-wing long-flight-hour UAV systems, including pterodactyl-1, pterodactyl-1D, pterodactyl-2 and other pterodactyl series UAV systems. with long flight time, fully autonomous multiple control modes, a variety of compound reconnaissance methods, multi-payload weapon integration, accurate reconnaissance and strike capabilities and comprehensive and flexible support capabilities.
The company's drone business revenue has increased significantly. From 2019 to 2022, the company's operating income was 251 million yuan, 1.217 billion yuan and 2.476 billion yuan respectively. In 2019, the company began to establish an independent procurement and sales system, and began to independently sell pterodactyl drone systems to the market, resulting in rapid growth of business revenue. The company's main business is the sales of UAV system products and the provision of related UAV technical services. During the reporting period, the company's main business is outstanding, accounting for more than 99.90% of business revenue. The overall operation of the company is good, and with the continuous expansion of UAV application scenarios and the increase of purchase orders for superimposed military UAV and civilian UAV, the performance is expected to be further released.
The scale of the military drone market is expected to grow. In recent years, with the development of information warfare, the demand for new equipment such as drones has increased greatly, coupled with the continuous outbreak of security issues and territorial disputes, equipped with drones has become an effective means to enhance their national defense strength at a lower cost, leading to the continuous expansion of global demand for military drones. According to the report of Tyre Group, the annual output value (including procurement) of global military drones increased year by year from 2019 to 2028, and is expected to reach US $14.798 billion by 2028, with a compound growth rate of about 5.36%. The market maintains a sustainable and stable development.
Investment advice. The company is the leading company of large fixed-wing long-time UAV system in China, and its products are widely recognized at home and abroad. At the same time, the products are scarce. During the reporting period, the company's contract liabilities increased significantly, orders were full, and the certainty of future performance growth was high; performance growth and gross profit margin and other indicators were better than comparable companies in the same industry. The company's leading position in the military market is difficult to shake, and with the increase in civil drone orders, it is expected to open a new channel for performance growth. It is estimated that the company's net profit from 2022 to 2024 will be 407 million yuan, 662 million yuan and 860 million yuan respectively, and the PE will be 87 times, 53 times and 41 times, respectively.
Risk tip: the number of new orders due to the decline in market demand is lower than expected. The high R & D cost leads to the lower-than-expected enterprise performance. The rise in the price of upstream materials caused by the risk of war between Russia and Ukraine.