CICC released a research report stating that, taking into comprehensive consideration CIRRUS's (02507) delivery pace and product upgrade pricing, the firm has raised its 2025/2026 net profit forecasts by 8.8%/11.1% to US$151/177 million. The current share price corresponds to 16.5/14.0x P/E for 2025/2026. Considering the company's mature business model and stable profitability, and referencing comparable peer companies, the firm is switching its valuation method from EV/EBITDA to PE valuation. The firm maintains its outperform rating and, considering the company's position as a global private aircraft leader with a full order backlog and high earnings certainty, has raised the company's target price by 48.5% to HK$63.85, corresponding to 20.0/17.0x P/E for 2025/2026, with potential upside of 21%.

CICC's main viewpoints are as follows:

1H25 Results Exceeded Market Expectations The company announced 1H25 results: CIRRUS achieved revenue of US$594 million in 1H25, up 24.90% YoY; net profit of US$64.97 million, up 82.45% YoY. Profit growth significantly exceeded expectations, primarily due to increased delivery proportion of new-generation products with significant pricing effects, combined with service business growth, driving substantial margin improvement.

Both Aircraft and Service Businesses Growing Rapidly, Order Backlog Remains at High Levels 1) The company's aircraft manufacturing business achieved revenue of US$498 million in 1H25, up 25.2% YoY, accounting for 83.8%; service business achieved revenue of US$96 million, up 24.1% YoY, accounting for 16.2%. 2) 1H25 delivery volume increased 22% YoY to 350 aircraft, including 305 SR2X series aircraft and 43 Vision Jets. Q1/Q2 delivered 150/200 aircraft respectively, with Q1 doubling YoY and Q2 declining slightly by 5.7% YoY. 3) As of June 30, 2025, the order backlog stood at 1,056 aircraft, including 827 SR2X series and 229 Vision Jets. The company's order backlog continues to maintain high levels, sustaining approximately 1.5 years of production.

Significant Product Pricing Effects, Profitability Substantially Improved 1) In 1H25, the company's SR2X average delivery price increased from US$1.04 million to US$1.14 million, up 9.6% YoY; Vision Jets increased from US$3.33 million to US$3.48 million, up 4.5% YoY. In May 2025, the company launched the new SR series G7+, standard equipped with Safe Return Emergency Autoland system and Cirrus IQ PRO supporting automatic database updates and runway occupancy awareness functions, continuing to raise prices based on the G7 product. 2) 1H25 gross margin/net margin improved by 1.8ppt/3.4ppt to 36.2%/10.9% respectively. The firm believes the increased proportion of high-value-added new-generation products in delivered aircraft drove substantial profitability improvement.

Enhanced Service Ecosystem Stickiness, Expanding Grand Forks Manufacturing Facility Capacity to Meet Strong Downstream Demand 1) As of June 30, 2025, the company has sold products to customers in 55 countries and regions globally and established authorized service centers in 32 countries. JetStream program and flight training revenue contributions increased, enhancing ecosystem stickiness. 2) In June 2025, the company announced on its official website plans to invest US$13 million in Grand Forks manufacturing facility expansion, from 165,000 to 195,000 square feet. The firm believes the company's aircraft manufacturing and service businesses continue to develop positively, with long-term growth prospects as a global private aircraft leader.

Risk Factors: Regulatory risks; macroeconomic uncertainties; capacity bottlenecks and supply chain shortage risks; changes in consumer preferences; negative aviation industry news; geopolitical tensions.