2024-04-15 07:32:15 ET
Summary
- China's eVTOL aircraft market has experienced explosive growth since 2024 driven by supportive policies, certified eVTOL models, and a vast unmet demand.
- With an 18-24 month lead in eVTOL certification over competitors, EHang is the only certified eVTOL provider in China.
- In the near term, aerial tourism will serve as a key growth driver, as it faces no regulatory hurdles and minimal requirements for infrastructure.
- EHang is undervalued compared to its pre-revenue peers, offering a substantial upside for the stock price.
Investment Thesis
I initiate coverage of EHang Holdings Limited ( EH ) with a Buy. Given its first mover advantage and lack of competitors for the next 18-24 months, EHang is well positioned to benefit from China's booming electric vertical take-off and landing (eVTOL) aircraft market.
In China, the tourism, transportation and logistics industries present vast unmet demand for eVTOL aircraft, due to the country's small general aviation (GA) fleet, underdeveloped GA infrastructure, and tight supply of airspace. Since 2023, developing a low-altitude economy has become a key priority of the Chinese government, leading to the gradual opening of airspace, and acceleration of aircraft certifications. In October 2023, EHang became the first global eVTOL maker to receive an airworthiness certificate from the civil aviation authority, moving the Chinese eVTOL industry from concept to realization. Its revenue has taken off since 3Q23 as new orders flooded in....
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EHang: Pioneer In China's eVTOL Industry, Initiating With A Buy