Sealand: Low-altitude infrastructure construction takes the lead, with air traffic control systems leading the way in the trillion-dollar race.

Sealand released a research report stating that the low-altitude economy has made significant progress from being mentioned in government work reports to being classified as a new productive force, and various provinces and cities have successively implemented 3-year low-altitude action plans, clearly demonstrating the progress of the low-altitude industry. Structurally, the low-altitude air traffic management system is the most promising area to be implemented first, which can drive companies in the information system related industrial chain to achieve leapfrog development. According to data from CCID Consulting, the proportion of low-altitude infrastructure construction and flight support in the low-altitude economic industry is only 5%, and the market space has not been fully released. There is ample room for the proportion of mid-term low-altitude infrastructure construction to increase. The main points of Sealand are as follows: 1. The low-altitude economy, as an important representative of the country's new productive forces, is continuously promoted by the integration of central top-level design and local policies. 2. The central top-level design continues to deepen: In 2021, "low-altitude economy" was first mentioned in the "National Comprehensive Three-Dimensional Transportation Network Plan Outline"; in 2023, the Central Economic Work Conference included the low-altitude economy as a strategic emerging industry; in 2024, the low-altitude economy was mentioned for the first time in the government work report and included in the category of new productive forces; by the end of March 2024, the Ministry of Industry and Information Technology and four other departments jointly released the "Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)" which specified the development goals of China's general aviation industry for 2027 and 2030. 3. Several provinces and cities across the country have included the low-altitude economy in their government work reports and have planned for the target industry scale. By 2027, Shanghai/Henan aims for over 50 billion yuan, Anhui strives for 80 billion yuan, Beijing/Hubei for 100 billion yuan, and Guangdong plans to exceed 300 billion yuan by 2026. According to data from the Civil Aviation Administration, China's low-altitude economy market size exceeded 500 billion yuan in 2023, and is expected to exceed 2 trillion yuan by 2030. 4. In terms of funding, special bonds/ultra-long-term national bonds are expected to become an important support for the development of the low-altitude economy. For eligible low-altitude new infrastructure projects, the policy funds will be supported by central budget investment, local government special bonds, ultra-long-term special national bonds, etc. On September 26, 2024, the Political Bureau meeting proposed to increase the intensity of counter-cyclical fiscal policy adjustments; on October 12, the State Council Information Office held a press conference to release a series of targeted incremental policy measures, including increased support for local governments to resolve debt risks and reduce local debt pressure, freeing up more resources for economic development; concerns in the market about funding issues may be better resolved, and the low-altitude economy, as an important representative of the new productive forces, may continue to benefit from policy drive. Low-altitude infrastructure construction takes the lead, air traffic management system becomes the leader in trillion-dollar track. China's low-altitude economic industries have trillion-dollar market space in aircraft manufacturing, infrastructure construction, and cross-border integration ecosystems. According to data from CCID Consulting, the proportion of low-altitude infrastructure construction and flight support in the low-altitude economic industry is only 5%, and the market space has not been fully released. The proportion of mid-term low-altitude infrastructure construction can be increased, and the main reasons include: low-altitude infrastructure construction is the foundation for the development of the low-altitude industry. The "Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)" specifies the development goals of China's general aviation industry for 2027 and 2030. If China wants to build a mature general aviation and low-altitude industry by 2030, the period from 2024 to 2030 will be an acceleration period for the development of low-altitude infrastructure construction; low-altitude infrastructure projects can fully leverage existing air traffic management construction experience, compared to the more advanced eVTOL and relatively mature drone industries, low-altitude infrastructure construction is expected to be a more explosively growing track in the next 5 years. Low-altitude infrastructure construction includes air traffic control systems and infrastructure; the air traffic control system is the solid foundation for the development of the low-altitude economy, including CNS systems (including communication, navigation, surveillance) and air traffic management (ATM) system; from the perspective of landing rhythm, the air traffic management system is expected to become the leader in low-altitude infrastructure construction. The peripheral equipment (including communication, navigation, surveillance and related systems) already has a mature industrial model; information systems (including air traffic management systems) are expected to land at the fastest pace, and traditional air traffic control companies have the advantage. Related Targets: - Nanjing Les Information Technology: backed by CETC, it is an important civilian product platform under CETC Les. In the low-altitude field, Nanjing Les Information Technology provides an integrated system platform integrating "airspace delineation tools", "one-stop flight plan approval and filing", "full-process operation management", and "simulation testing", with main products including national/provincial/city low-altitude flight service management platforms, flight service centers/stations, and drone control systems for application scenarios. Nanjing Les Information Technology focuses on accelerating the development of the low-altitude "Tianmu" series of products around the flight management platform, collaborates with local governments to plan the overall development of low-altitude, and has close exchanges and strategic cooperation with more than 20 provinces and cities such as Beijing, Shanghai, Chongqing, Jiangsu, Anhui, Guangzhou, Nanjing, and Suzhou, achieving phased results in some areas. - Sichuan Jiuzhou: a subsidiary of Sichuan Jiuzhou Electric provides integrated software and hardware system solutions. The software includes low-altitude collaborative operation centers, flight service stations, low-altitude control systems, test business systems, teaching and training systems, etc.; hardware includes mainly airborne avionics and low-altitude basic infrastructure equipment, including airborne transponders, ADS-B series, radios, low-altitude collaborative control systems, radars, radio detection, series air traffic control testing simulation systems, etc., effectively covering the application needs of general aviation aircraft, medium and large drones, and eVTOL. - Shenzhen Urban Transport Planning Center: has built a comprehensive, turnkey solution capability for low-altitude economic "digital platform for the entire process, integrated delivery of all products, and full-cycle investing and operating services"; in terms of specific business operations, it actively collaborates to promote the integrated development and application of low-altitude technologies and products in multiple fields such as urban planning, civil aviation, land and resources, transportation, etc.The first phase of the construction of the benchmark project of the intelligent integration of low-altitude infrastructure in Shenzhen has been completed and delivered. At the same time, it has also undertaken research and development projects such as the "key technology of digital twin-based urban low-altitude environmental simulation modeling and dynamic monitoring" in Shenzhen. It has successfully bid and undertaken the layout planning projects of low-altitude aircraft take-off and landing facilities for cities such as Shenzhen, Wuxi, Zhongshan, and Jiangmen.Brilliance Technology: The low-altitude business includes a low-altitude flight plan declaration platform, integrated low-altitude airspace use plan declaration service platform construction in Shanghai, Shandong, Heilongjiang, Jilin and other places, providing airspace use plan declaration services for meteorological department operations and general aviation flight users in various regions. Low-altitude flight comprehensive monitoring system, won the bid for the construction project of the low-altitude comprehensive monitoring system by the end of 2023. In September 2024, it officially announced cooperation with Beijing Big Data Research Institute, jointly empowering the low-altitude economy with data and promoting the training of low-altitude data service talents. Wisesoft Co., Ltd.: The company is a leading domestic product development, system integration and service provider of three-dimensional face recognition system and air traffic control system. The products in the air traffic control field are divided into civil aviation and military aviation levels. Civil aviation level products include smart airports, flight simulation, control simulation machines, etc.; military aviation includes low-altitude airspace surveillance and low-altitude radar. Other related targets Low-altitude airspace management system: Nanjing Les Information Technology (688631.SH), Sichuan Jiuzhou Electric (000801.SZ), Brilliance Technology (300542.SZ), Wisesoft Co., Ltd. (002253.SZ), Glarun Technology (600562.SH), Voice Group (003004.SZ), etc. Low-altitude airspace planning/infrastructure: Shenzhen Urban Transport Planning Center (301091.SZ), China Design Group (603018.SH), Jsti Group (300284.SZ), Anhui Transport Consulting & Design Institute (603357.SH), etc. Low-altitude communication/navigation/safety/weather systems: Naruida Technology (688522.SH), Sun Create Electronics (600990.SH), BeiJing StarNeto Technology (002829.SZ), Piesat Information Technology (688066.SH), Beijing BDStar Navigation (002151.SZ), Guangzhou Hi-Target Navigation Tech (300177.SZ), China Telecom Corporation (00728), ZTE Corporation (000063.SZ), etc. Risk warning: Low-altitude industry development falls short of expectations, low-altitude related policy advancement falls short of expectations, technological iterations fall short of expectations, social issues risk, macroeconomic risk, and underperformance of related target companies.