A high-quality supplier of T/R components and RF chips, leading the industry at both military and civilian ends. The company is mainly engaged in the R&D, production and sales of active phased array T/R components and RF integrated circuit related products, and is currently a leading enterprise in China that can provide active phased array T/R components and serialized RF integrated circuit products in batches. The company is the R&D and production platform for active phased array T/R components with the largest sales volume for military industrial groups in China. In the civil field, as the core supplier of base station RF devices, the company's gallium arsenide base station RF integrated circuit technology is at the leading domestic and international advanced level, and competes with international leading companies, such as Skyworks, Qorvo, Sumitomo, etc., on the B01 supply chain platform, and the series of products have been widely used in the base stations of the 2nd, 3rd, 4th and 5th generation mobile communications.

Active phased array radar has entered the mainstream, and the company's products have fully benefited. Phased array radar is the key development direction of radar, which is widely used in airborne radar and shipborne radar, and has the characteristics of fast scanning time, strong anti-jamming ability and high reliability. The phased array radar, which is the most widely used in modern military radars, has been successfully developed in various types such as airborne fire control radars, early warning aircraft radars, and land-based air defense radars, and is expected to be installed on a large scale in a few years. Active phased array radar (AESA) will gradually replace mechanical scanning radar, passive phased array radar will become the mainstream, and gradually replace single-function radar, and develop in the direction of multi-functional phased array radar. The cost of the T/R component accounts for about 60% of the cost of the entire phased array radar system and is the core of the solid-state active phased array radar. As a core supplier of T/R components, the company is expected to fully benefit from this change in the industry.

Satellite Internet has entered the stage of large-scale construction, and the core components are about to be large-scale. On November 30, the first launch of China's first commercial space launch site, Hainan Commercial Space Launch Site, was a complete success. The new launch vehicle, Long March 12, successfully launched the Satellite Internet Technology Test Satellite and the Technology Test Satellite 03 into the scheduled orbit. The commercial space launch site was officially put into use, and the number of launch sites in China was further increased. On November 20, Shanghai Yuanxin Satellite Technology Co., Ltd. officially signed a memorandum of cooperation with Telecomunica es Brasileiras S.A., a Brazilian state-owned communications company. It is expected that Yuanxin Satellite will provide official commercial services to the Brazilian region in 2026. In addition, Yuanxin Satellite has started business negotiations with more than 30 countries. Yuanxin launched the satellite three times on August 6, 10.15 and 12.05 respectively, and the time interval is getting smaller and smaller, and it has entered the normalized and flight-based launch channel. We believe that with the gradual improvement of launch capabilities and the initial establishment of downstream demand, satellite Internet may have entered large-scale construction. In satellite payloads, phased array antennas are the core part of low-orbit communication satellites, and T/R components are the key to phased array antennas. We believe that the company, as the core supplier of T/R components in China, may fully benefit from the large-scale construction of satellite Internet.

Investment advice: We expect the company's total revenue from 2024 to 2026 to be 2,850/3,648/4,419 million yuan, and net profit attributable to the parent company to be 457/625/761 million yuan. The corresponding PE multiple on December 26 is 62.65/45.77/37.61 times.

According to the company's prospectus and the comparison of its main business, Raiden Microforce, Chengchang Technology, and Zhuosheng Micro are selected as comparable companies, and the average PE multiple of comparable companies from 2024 to 2026 is 71.30/49.89/39.18. The company's price-to-earnings ratio is slightly lower than the average of comparable companies, and we believe that the company's T/R module product revenue will improve next year, and will fully benefit from the construction of satellite Internet.

Risk Warning: The construction of satellite Internet is less than expected; Downstream customer demand is less than expected; 5G-A construction is less than expected