Core Viewpoint - The company plans to raise 230 million yuan through a capital increase and share expansion for its wholly-owned subsidiary, Chongqing Aerospace Rocket Electronic Technology Co., Ltd., to meet funding needs for smart manufacturing and R&D [1][2]. Group 1: Capital Increase Details - Chongqing Aerospace Company will publicly introduce one strategic investor through the Beijing Property Exchange, with a maximum share release of 29.39% [1][3]. - The capital increase does not constitute a related party transaction or a major asset restructuring as defined by regulations [2][3]. - The board of directors approved the capital increase on August 27, 2025, and it does not require shareholder meeting approval [1][2]. Group 2: Company Background - Chongqing Aerospace Company was established in 2006, with a registered capital of 218.83 million yuan, focusing on the R&D and production of telemetry, unmanned aerial vehicle data links, and satellite communication systems [2]. Group 3: Financial Assessment - As of January 31, 2025, the net asset book value of Chongqing Aerospace Company was 462.99 million yuan, while the assessed net asset value was 552.50 million yuan [3]. - The capital increase price is based on the assessed net asset value, with each 1 yuan of registered capital priced at 2.5248 yuan [4]. Group 4: Use of Funds - The 230 million yuan raised will be used for advanced technology research in areas such as measurement and control communication, satellite applications, and smart manufacturing [6]. - The capital increase aims to enhance technical capabilities, expand industry scale and efficiency, and optimize financial indicators [6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 23.50 [7][8]. Core Views - The company achieved a turnaround in profitability in Q1 2025, with revenue of RMB 1.26 billion, a year-on-year increase of 84.41%, and a net profit of RMB 13.23 million, exceeding previous expectations [1]. - The low Earth orbit satellite business is expected to drive significant growth, supported by the acceleration of the Qianfan constellation project, which aims to launch 1,296 satellites by 2028 [2]. - The company is focusing on military broadband communication and optimizing tactical communication equipment to strengthen its leading position in the industry [2]. Summary by Sections Financial Performance - In 2024, the company reported revenue of RMB 353.3 million, a year-on-year increase of 12.97%, and a net loss of RMB 123.89 million, showing a reduction in losses compared to the previous year [6]. - The gross margin for 2024 was 43.28%, with a net profit margin of -35.06%, reflecting a year-on-year improvement of 25.61 percentage points [3]. - For Q1 2025, the gross margin was 37.56%, and the net profit margin was 10.54%, indicating a significant year-on-year increase of 25.28 percentage points [3]. Revenue and Profit Forecast - The revenue forecast for 2025-2027 has been adjusted downwards due to short-term pressures on military broadband business and an increase in satellite business share, with expected net profits of RMB 241.93 million, RMB 289.79 million, and RMB 358 million for 2025, 2026, and 2027 respectively [4][19]. - The company’s PE ratio for 2025 is projected at 61x, reflecting its strategic positioning in the G60 satellite network and military broadband sector [4][20]. Market Position and Growth Drivers - The company is positioned as a core supplier for the Qianfan constellation, with expected sales of RMB 150 million to partners in 2024, accounting for 43% of its revenue [2]. - The military broadband sector is anticipated to recover gradually, with new product applications in military 5G and data links expected to contribute to revenue and profit recovery [1][2].