Key investment points
Low altitude economy has a trillion new blue ocean, and aviation electric drive has benefited from the large-scale development of the UAV industry. Since the 2024 NPC and CPPCC will set the low altitude economy as a new growth engine, the provincial and municipal high-quality development plans for low altitude economy have been issued successively, and the low altitude economy industry will usher in high-speed development opportunities under the policy support. According to CCID's Research Report on China's Low Altitude Economic Development (2024), it is estimated that the low altitude economic scale is expected to grow to 1064.46 billion yuan by 2026. According to the development path of "cargo first, passenger later" of civil aviation, we believe that industrial UAVs are expected to take the lead in the development wave of low altitude economy, and the market size will exceed 86 billion yuan in 24 years; The eVTOL industry will usher in the first round of commercial outbreak cycle in 2024. In 2024/2026, the market size of the domestic eVTOL industry will reach 3.2 billion yuan/9.5 billion yuan respectively, and the aviation electric drive will fully benefit from the development of the UAV industry.
The company is a global leader in aviation electric drive and has a complete product family with strong research and development strength. Since 2019, the company has been committed to developing aviation electric drive power system products and is at the international first-class level in the field of aviation electric drive and control. The company has established three power levels of driving products and an airworthiness standard product layout, including ① low-power products are mainly used in industrial UAVs and 1~2 seat eVTOLs, and has begun to provide small batch samples to domestic mainstream logistics UAV enterprises; ② The medium power products are mainly used in four seat manned eVTOL, have technical communication with domestic mainstream eVTOL manufacturers, and relevant research and development projects are in progress; ③ High power products are applied to regional aircrafts with tens to tens of seats. At present, they are mainly pre researched.
Deep cooperation with top electric aircraft manufacturers, covering regional aircraft, eVTOL and industrial UAV companies, has established long-term and in-depth cooperation with domestic electric aircraft and UAV manufacturers. ① As early as 2022, COMAC and Wolong have maintained mutual visits and exchanges. In October 2023, COMAC Wolong "Aviation Electric Power System Division" was inaugurated; ② Signed a strategic cooperation agreement with Wofei in Chengdu in April 2021 and carried out in-depth cooperation in the field of intelligent aviation and pure electric drive; ③ With Wanfeng, a strategic cooperation agreement was signed in December 2020 to jointly promote the product development and market promotion of aviation motors and magnesium alloy shells; ④ With Shunfeng, the company has started to provide drive motors for industrial and logistics UAVs of Shunfeng for 22 years; ⑤ With Shanhe, in April 2023, the two sides will conduct in-depth discussions and exchanges on the electrification trend in the aviation aircraft field, the development of electric aviation technology, and the cooperation in subsequent related projects.
Profit forecast and valuation
Maintain the profit forecast and the "buy" rating. The company is a global leader in industrial motors, and has a solid foundation in the field of electric aerospace together with the leader in main engines. We maintain the company's profit forecast. It is estimated that the net profit attributable to the parent company from 2024 to 2026 will be RMB 1.302 billion, RMB 1.432 billion and RMB 1.694 billion respectively, the corresponding EPS will be RMB 0.99, RMB 1.09 and RMB 1.29 per share respectively, and the corresponding PE will be 15, 14 and 12 times of the closing price on May 22 respectively. We selected Bafang Shares, Jiadian Shares and Changyuan Donggu and Zongshen Power, which are engaged in the motor industry, and the low altitude economic industry, as the comparable companies, with an average of 25 times in the same industry in 24 years. Considering the company's growth and margin of safety, as well as its leading position in the field of aviation electric drive, we give the company a PE valuation of 25 times in 2024, corresponding to a market value of 32.6 billion yuan, a target price of 24.75 yuan, and corresponding to the current market value, there is 61% room for growth, maintaining the "buy" rating.
Risk warning
Macroeconomic risk, raw material price fluctuation risk, exchange rate fluctuation and international trade environment risk, and the risk that the customer's eVTOL airworthiness certification progress is less than expected
