On the evening of March 15th, EH.US released its performance reports for the fourth quarter and full year of 2023.
Overall, the company's total revenue was RMB 117.4 million (approximately USD 16.5 million), an increase of 165% year-on-year; The net loss was RMB 302.3 million (approximately USD 42.6 million), a decrease of 8.2% year-on-year. 52 EH216 series autonomous aircraft were delivered throughout the year, compared to 21 in 2022.
After the financial report was released, Yihang Intelligence saw a significant increase. As of the close of March 15th Eastern Time, it rose 12.93% to $15.37.
With Yihang Intelligence obtaining TC certification in October 2023, its performance experienced a slight explosion in the fourth quarter. "After obtaining TC and AC, the demand for EH216 in the market has significantly increased, with a single quarter delivery volume reaching the highest in three years." Hu Huazhi, founder, chairman, and CEO of Yihang Intelligence, stated in the Q4 and fiscal year 2023 performance conference calls.
In the fourth quarter of 2023, Yihang Intelligent delivered 23 EH216 series eVTOLs, with 6 and 13 aircraft in the fourth quarter of 2022 and the third quarter of 2023, respectively, driving revenue of 56.6 million yuan (approximately 8 million US dollars), a year-on-year increase of 260.9%. It is expected that the total revenue in the first quarter of this year will be approximately RMB 58 million, a year-on-year increase of 160%.
In Shenzhen, Guangzhou, Hefei and other places, Yihang Intelligence has completed its first commercial flight display. Hu Huazhi mentioned that hundreds of EH216-S pre orders have been received in Shenzhen, Guangzhou, Hefei, Wuxi, and the United Arab Emirates.
With the increase in sales volume, Yihang Intelligence achieved a positive operating cash flow in the fourth quarter. As of the end of December 2023, the total balance of the company's cash and cash equivalents, short-term deposits, short-term investments, and restricted short-term deposits was RMB 334.1 million (approximately USD 47.1 million).
"In order to prepare for the next stage of large-scale production, the production license PC audit work has also come to an end. Currently, the review team of the Civil Aviation Administration of China has completed all on-site inspections and is expected to obtain the PC. Hu Huazhi revealed that another model VT-30 will also undergo airworthiness certification within this year. Currently, VT-30 has completed all overall configuration verification and flight tests.", "For urban air traffic, the number of aerial taxis should be the largest, so EH216 is the first to obtain evidence. With the addition of VT-30, these two models basically cover all application scenarios of China's low altitude economic travel."
2024 is regarded as the "first year of low altitude economy and commerce". In December 2023, the low altitude economy was listed as a strategic emerging industry. Since the beginning of this year, about 20 provinces in China have included content related to low altitude economy in the 2024 government work report.
Interface news analysis revealed that support policies in multiple regions have combined local resource characteristics and existing advantages. Guangdong has a long coastline, and it is proposed to support the construction of comprehensive demonstration zones for the general aviation industry in Shenzhen, Guangzhou, and Zhuhai, and innovate application scenarios such as urban air transportation, emergency rescue, and logistics transportation; In recent years, Hainan has become a popular tourist destination, proposing to promote consumption models such as connecting the navigation industry with cruise ships and yachts, offshore duty-free, offshore fishing, and aerial sightseeing; Sichuan has accumulated experience in the aviation industry for many years, and has pointed out that it supports the development of unmanned aerial vehicles, military and civilian industries, as well as state-owned and private enterprises. It also supports the expansion of unmanned aerial vehicle industry clusters in cities such as Chengdu and Zigong.
In addition to Yihang Intelligence, leading domestic and foreign manufacturers have put airworthiness certification on the agenda. Fengfei Airlines aims to obtain airworthiness certification for its V1500M by the end of this year, and its technology E20 and Volvo VE25 X1 have submitted TC applications. In addition, models such as the Wofei Changkong AE200, Yufeng Future Matrix 1, Joby S4, Lilium Jet, and Vertical VX4 are all in the airworthiness certification stage. The Lilium Jet and Vertical VX4 are planned to obtain certification in the second half of 2025 and 2026, respectively.
Despite the release of various positive signals from the policy side, the low altitude economy is in its early stages of development, and currently neither the production nor operation sides have benefited from its scale advantage. Previously, He Tianxing, Vice President of Yihang Intelligence, stated in an interview with Interface News that due to the current insufficient production volume and high prices of upstream and downstream components in the industrial chain, cost pressure on the production end still exists before achieving scale.
In the fourth quarter of 2023, the company's gross profit margin was 64.7%, a decrease of 1.4 percentage points year-on-year, mainly due to changes in revenue structure and an increase in unit costs of the EH216 series products.
The sales channels continue to expand, coupled with continuous expenses generated by EH216-S TC compliance testing, the company's total operating expenses reached RMB 377.8 million (53.2 million US dollars) in 2023, an increase of 11.3%.
Since its establishment, Yihang Intelligence has been operating at a loss. As of the end of 2023, the cumulative loss was RMB 1.7545 billion (USD 247.1 million). The replication and promotion of the EH216-S business model is also seen as the key to improving cash flow and achieving profitability.
"At present, we are preparing for a series of commercial operations, including operator training and the development of operating systems. This year, we will achieve the commercial operation of aerial taxis, transforming one-dimensional traffic into three-dimensional traffic, which will show a huge scale," said Hu Huazhi.
In order to reduce upstream and downstream costs, Yihang Intelligence has focused more on the component side and strategically invested in Shenzhen Lithium Metal Solid State Battery Company Xinshijie in September 2023. In January of this year, it reached a cooperation agreement with Hefei Guoxuan High tech to jointly develop power cells, battery packs, energy storage systems, and charging infrastructure.
"Lithium metal solid-state batteries have significant advantages over liquid batteries in terms of safety, energy density, thermal stability, range, and charging performance, and their range will increase exponentially," Hu Huazhi said.
In February of this year, the company cooperated with Guangzhou Automobile Group. Hu Huazhi revealed that the consensus reached by both sides is "to jointly produce things": "GAC is also making flying cars, and will entrust Yihang Intelligence to develop and produce them. Recently, we have chosen a production location in Guangzhou with GAC, and we will establish an automated production line."
According to a research report by CITIC Securities on March 8th, the global low altitude economy is in the early stages of cultivation and is expected to become one of the important economic growth engines for the next fifteen years. Low altitude economy includes various application scenarios such as cargo, manned, and smart cities, and new energy aircraft is considered the mainstream of future development.
Zhang Zhiyong, Chairman of Yuanhang Capital, which focuses on commercial aerospace as one of its investment directions, pointed out in an interview with Interface News that several issues still need to be addressed in order to develop the low altitude economy. Firstly, there is the process of user training and education. Compared to Europe and America, "the number of drones or private planes in China is still very low. However, Hong Kong has an advantage in this area, with a large number of private planes and many rooftops with aprons. High net worth individuals need this service even more."
In addition, the development of low altitude economy is closely related to the level of integrated air traffic control. The evolution of integrated air traffic control technology is also very important in managing all aircraft such as military aircraft, civil aircraft, and drones in a transportation network. The commercialization of low altitude economy is divided into freight and passenger transportation, because it involves life safety, usually freight is first, and then passenger transportation. But in fact, the flight control system, power system, and unmanned platform behind it are all consistent, and their cycles will not be too far apart. I expect it to be within five years Zhang Zhiyong believes that.