For many years, the company has focused on the research, development and production of large-scale fixed-wing long-flight-hour UAV system, and is committed to serving national security and "Belt and Road Initiative". It has become the leading enterprise of domestic military large-scale fixed-wing long flight-time UAV system. With the continued development of the "pterodactyl" series of unmanned aircraft pedigree in the future, the company will once again improve its performance and make great strides towards building a domestic leading and world-class specialized company for drones.

The company's performance is growing rapidly and its profitability remains stable. Since 2019, the company has been acting as an overall unit to sell pterodactyl drone systems, sign new contract orders and carry out raw material procurement activities accordingly. According to the simulated consolidated financial statements in the prospectus, the business revenue of pterodactyl drones increased from 1.83 billion in 2019 to 2.515 billion in 2021, with a compound annual growth rate of 17.23%, mainly due to the continuous expansion of customers of pterodactyl drones in the international military trade market. at the same time, the company achieved development in the domestic military market and realized sales revenue. The company's return net profit has achieved rapid growth with the transfer of the pterodactyl drone business. In the first three quarters of 2022, the company achieved operating income of 2.166 billion yuan, an increase of 11.69% over the same period last year; net profit reached 359 million yuan, higher than the level for the whole year of 2021, an increase of 20.38% over the same period last year.

There is a huge gap in the demand of our country for UAV to rewrite the form of war. Since Operation enduring Freedom in the war in Afghanistan in 2001, the role of drones has become increasingly important. The US military is also increasingly dependent on drones. In the recent conflict between Russia and Ukraine, the role of drones in modern warfare has become more and more profound, and its role as a breaker to rewrite the form of war has become more and more popular. Since the outbreak of the conflict, Russia and Ukraine have frequently put drone equipment into the battlefield, coupled with the United States and other NATO countries continue to provide drone military assistance to Ukraine, the number of drones in the Russian-Ukrainian battlefield is far more than before, the results are also unexpected. At present, compared with the 1040 UAV installed in the United States, there is a huge demand gap in our country. with the steady growth of our military expenditure and the compensation of the gap of UAV, it is expected to release a broad market space.

China's drones dominate the arms trade market, and the "pterodactyl" series is brilliant. 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. From 2010 to 2020, among the few countries in the world capable of exporting drones, China accounted for about 17% of the market share of UAV arms trade, ranking third after Israel and the United States. China's main export models are "pterodactyl" and "rainbow" series UAV, in which "pterodactyl" series UAV accounts for half of China's UAV export, winning a wide range of international market reputation. According to the US Aviation Weekly (AVIATION WEEK) in May 2021, the pterodactyl series of drones ranked second in the global market share of integrated drones. The company's "pterodactyl" series of drones shine brilliantly in the arms trade market. under the current conflict between Russia and Ukraine and the increasingly tense international situation, the international arms trade market of drones will remain active, and the "pterodactyl" drones have strong core competitiveness. will further open the international market and achieve soaring.

The company actively develops new growth points in the civilian market of drones. Facing the major needs of the country, the company co-ordinates the industrial development and upgrading in key areas such as meteorology and emergency response, and actively develops the application scene in the civilian field by relying on the mature UAV platform of "pterodactyl" series. combined with the advanced technology of military UAV and broke through the anti-deicing technology and mission load rapid integration technology, the reliability and mission operation efficiency of UAV in complex environment are enhanced. It has realized the ability of UAV anti-icing and meteorological detection, and successfully opened up the market fields of civil UAV, such as artificial influence of weather, emergency communication and so on. According to the Frost&Sullivan report, the market size of China's industrial UAV in the emergency industry is 604 million yuan in 2019, and it is expected to reach 8.029 billion yuan by 2024. In the field of artificial weather, it is estimated that the affected area of artificial rain (snow) operation will reach more than 5.5 million square kilometers in 2025. Large-scale fixed-wing long-flight-hour UAV system has the characteristics and advantages of long flight range, heavy mission load and high practical lift. it is expected to become an important air operation tool to artificially affect the weather in the future, and it also has a broad market demand.

It is expected that the development of the civil market in the future will bring new performance growth points to the company.

Taking advantage of the fund-raising wind, the pterodactyl is expected to fly high. The funds raised by the company will be invested in the construction of "UAV system Development and industrialization Project" and "Technology Research and R & D capability Promotion Project". After the implementation of the project, the company will: 1) according to the demand of domestic and foreign, military and civil markets for large fixed-wing long flight hour UAV system, the company will complete the development of pterodactyl-2 development type (including pterodactyl-2 development Ⅰ type and pterodactyl-2 development Ⅱ type) and pterodactyl-1E development type UAV system on the original platform, so as to realize the product pedigree development of large fixed wing long flight time UAV system and enhance the product competitiveness. Realize the intelligent processing capability of UAV based on big data; according to the application needs of the industry, based on mature platform, develop the extended UAV system of pterodactyl application. At the same time, to create an information-based, flexible and intelligent production line to enhance the company's large fixed-wing long flight time UAV mass production service capacity. 2) Research and development of new UAV layout, research and verification of key technologies of new large fixed-wing long flight time UAV platform, and research and verification of key technologies of unmanned early warning. Through related research to enhance the technological maturity of new products, lay a solid engineering and technical foundation for the future development of high-end UAV products, and drive the great-leap-forward development of UAV system technology in China.

Profit forecast: the company's return net profit from 2022 to 2024 is 383 million yuan, 511 million yuan and 709 million yuan respectively, corresponding to the valuation of 94-70-51 times, maintaining the "highly recommended" rating!

Risk hint: the release of downstream demand is lower than expected, and the intensification of market competition leads to a decline in the company's share and profits; the risk of sharp fluctuations in stock prices.