Q1 2025 EHang Holdings Ltd Earnings Call

Yahoo

27-05-2025

Huazhi Hu; Chairman of the Board, Chief Executive Officer, Founder; EHang Holdings Ltd
Zhao Wang; Chief Operating Officer; EHang Holdings Ltd
Chia - Hung Yang; Chief Financial Officer, Board Director; EHang Holdings Ltd
Laura Lee; Analyst; Deutsche Bank
Shen Wei; Analyst; UBS
Fuyin Liang; Analyst; Bank of America
Yiming Wang; Analyst; China Renaissance
Operator
Hello everyone.Thank you all for joining us on today's conference call to discuss the company's financial results for the first quarter of 2025. The earnings release is available on the company's IR website. Please note the conference call is being recorded and the audio replay will be posted on the company's IR website.On the call today, we have Mr. Huang Zhihu, our founder, Chairman, and the Chief Executive Officer, Mr. Zhao Wang, Chief Operating Officer, and Mr. Kona Yang, Chief Financial Officer.Before we continue, please note that today's discussion will contain forward-looking statement made pursuant to the safe harbor provisions of the US Private Security Litigation Reform Act of 1,995.Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today.Further information regarding this and other risks and uncertainties is included in the company's public filings with ICC.The company does not assume any obligation to update any forward-looking statements except as required under applicable law.Also, please note that all numbers presented are in RMB and are for the first quarter of 2025. Unless stated otherwise.With that, let me now turn over to our CEO, Mr. Hua Zhihu. Please go ahead, Mr. Hu.
Huazhi Hu
Hello everyone and thank you for joining our earnings conference call today. We started the 2025 with another major regulatory breakthrough. In the end of March, Yihan General Aviation, are a wholly owned subsidiary, and Hei Aviation, an operator of our client in Hefei, were granted the first batch of air operator certificates for human carrying pilotless aerial vehicles by the Civil Aviation Administration of China.This approval officially takes us from product certification into the era of commercial flight operations. It marks the beginning of a commercial eve services in China's low altitude economy, allowing the general public to experience veto flights for the first time. The issuance of the OC signifies that Yihan has achieved the full life cycle capabilities of Evido from design and R&D to manufacturing, airworthiness certification, and now operational readiness. This completes a fully integrated commercial loop. At the same time, we are gradually contributing to the development of industry innovation standards in areas like infras. Structure, personal training and operational safety. Step by step, we are advancing toward our long term strategic goal, evolving from manufacture of autonomous aerial vehicle into a comprehensive urban air mobility platform operator, delivering a one-stop solution to our clients that covering aircraft, hardware, software, operational services, and standard systems.In the first OC represents the most critical milestone for enabling commercial operations. With this issuance, in Han has officially entered the commercialization phase, a stage that brings both opportunity and great responsibility. Aviation has always progressed with caution and discipline, and as a pioneer in this emerging field, Yihong remains deeply committed to the principle of safety first. We are taking a deliberate and Based approach. On one hand, we continue to accumulate flight test data and provide strong support to our operator partners such as safe operation guidance and maintenance. On the other hand, we're adopting a phase or strategy, first, isolation and then integration. First, tourism, then transportation, and first pilot projects, then expansion. We're not rushing to scale or chasing short term gains. Instead, our early efforts are focused on pilot cities where our clients are to accumulate operational experience and build racable models to gradually lift OC operational restrictions. For example, we started with a clearly defined low risk scenarios such as sightseeing flights before expanding into more. Urban air mobility services like urban air commuting. This will pave the way for the gradual realization and scaling of commercial operations for autonomous human carrying aircraft. We believe this is the right path forward for our customers, for our partners, and for the healthy development of the entire urban air mobility industry.Turning to the product development, our next generation long range pilotless human carrying.The VT 35 has completed the final assembly of its first unit based on the VT30 prototype. The VT35 features significant upgrades, including the industry's most stable and safe autonomous flight control and propulsion systems. With our proprietary autonomous platform and a command and control system technologies, the VT 35 deliveries. Disruptive innovations in both the design and reliability. We believe it will become an outstanding model among medium and long range video products. It is now undergoing full scale flight testing. The CAAC has officially accepted our type certification application for the VT 35, and the aircraft is already being used for airworthiness validation test.Leveraging our EH216-S certification experience, we expect it helps accelerate the VT 35 certification process. We plan to unveil the VTE 35 in the third quarter of this year. In the international market, we believe the VT 35, backed by China's industrial strength and advanced manufacturing, will offer a clear cost and competitive advantage over other long range vital products globally.On the innovation front, R&D has always been the driving force behind Ihan. We currently hold over 700 issued and pending patent assets worldwide. Nearly half of our team is dedicated to R&D, and many of our top engineers and technical leads like me come from Tsinghua University. There's strong academic foundation in aerospace automation. And intelligent manufacturing along with the nearly 10 years of experience and Ihan have positioned us as a global leader in autonomous flight systems and technologies. In February this year, the Aerospace and Intelligent Manufacturing Committee of the Tsinghua Alumni Association was officially launched at Yihan's headquarters in Guangzhou. We are honored to serve as the chair member and myself as the Chairman. Through this committee, we aim to build an innovative ecosystem for the low altitude economy in the Greater Bay Area, combining e-house leadership in autonomous aviation with the Tsinghua University's deep strengths in research and talents. Our shared goal is to drive continuous R&D and achieve breakthroughs in next generation powerless aerial vehicle technologies. In March, we also signed an MOU with the University of Zaragoza in Spain and Guangzhou University to establish a joint low latitude flight safety lab.With their support, we are deepening our cooperation with the European Union Aviation Safety Agency and advancing joint and R&D and talent development in Europe. With continuous innovation and differentiated core competitiveness, we will remain a global leader in the pilotless video industry and continue to shape the future of urban air mobility. With that, I'll hand it over to our Chief Operating Officer, Mr. Wang, to walk through our operational highlights.Thank you.
Zhao Wang
Thank you, Mr. Hu. In the first quarter, we delivered 11 units of our EH216s and generated revenues of RMB26.1 million. The load delivery volume was primarily due to three factors. First, seasonal slowdown. The winter months, and the Chinese New Year holiday typically make Q1 an offseason for products. Deliveries. Second, after the holiday, many clients, especially those involving government procurement, required time for their internal budgeting and approval process. Third, as the issuance of an OC was approaching, some customers chose to place their orders after the OC was granted, meaning those orders were not reflected in Q1 results. At the same time in Q1 2025, we kicked off the expansion and upgrade of our yunfu production base. The size of our main factory has now doubled and once fully operational, it will support an annual production capacity of up to 1,000 units. In parallel, we're also building additional assembly facilities in Hefei, Anhui province and Weihai, Shandong Province. These multiple sites will ensure we have ample production capacity to. Fulfill orders in the future while also providing supply of spare parts and consumables for the aircraft in operations. On March 28th, 2 operators of the EH216 and relevant services were officially granted their OC. This marks a significant milestone for both Ehan and the industry as it formally allows autonomous human carrying aircraft to begin commercial operations in China. It also demonstrates strong recognition and validation of our EH216 from both the CAAC and the market. With the commercial operations now underway, we expect the flood activities to ramp up significantly since the second quarter. The decline in Q1 performance was only temporary.Underlying demand remains robust with procurement and deliveries were simply deferred to later quarters. We are pleased to see that following the issuance of the OC consumer inquiries and order volumes have picked up significantly. We could expect a strong rebound in the 2nd quarter. Several major orders were discussed in Q1 with the customers from provinces such as Jilin, Jiangxi, Guizhou, Hainan. Anhui and Guangdong in China are now moving forward and will begin to convert into delivery starting in the 2nd quarter in phased batches. On the operation side, following the CAC's principle of safety first, Ihan and our operator partners are implementing enhanced standards to ensure safe and compliant flight operations. The two certified operators, hey Aviation and Yihong General Aviation, are taking a phased 3-step roll out, starting with only trial operations followed by human carrying trial operations and automatically transitioning into routine human carrying commercial services. This approach ensures a safe, stable, and seamless progression toward full scale commercial operations. Currently, both operators have entered. Human carrying trial phase at designated cities in Guangzhou's Seiggan Pier and Hefei Lugang Park. These flights are being offered initially to internal staff and a selected group of invited passengers by ticketing platforms. Once sufficient experience and safety data have been accumulated, the operators will begin offering flight tickets sales to the public. At the same time, we're actively laying groundwork for scaled to commercial operations by enhancing our customer service infrastructure.This includes providing standardized and scalable flight route planning, modular and customized vertiport designs, and the systematic training program for operational and maintenance personnel. These efforts are aimed at helping more customers prepare for their OC. Applications in 1, we supported a customer in Shanghai in establishing a veto operation center at Longhua Airport on the Xuhui Riverside and successfully completed the first EH216 flight in the city. This also marked the start of routine sightseeing flights along the Huangpu River in Shanghai. In Wenchu, Zhejiang province, the world's largest UAM center for Edo expression sales and operations. Was established. Meanwhile, in Shenzhen's local district, our client has launched a UEM demonstration and experience center. This facility features the world's first fully autonomated multi-level smart Ito ver ports, setting a new benchmark for urban low altitude infrastructure. Additionally, in collaboration with the China Communications Information and Technology Group, we are building a multi-level urban transportation hub in Nalati Xinjiang, these are examples of how the low altitude economy will diversify its operational models and shape a more vibrant future oriented way of lifestyle. On the industrial collaboration front, in February, we entered into a strategic partnership with JAC Motors and Guoshen Holdings to jointly develop a next generation Evido manufacturing base in Hefei.More recently, we expanded our partnership with the CCIT to include CCCC dash FHDI Engineering Company, forming a trilateral collaboration on three key areas. First, we're focusing on delivering specialized low-altitude of tourism routes, smart innercity transportation corridors, and emergency response networks. This includes creating unique transport systems such as themed low latitude tourism experiences and aerial canal logistics pathways. Second, we are jointly building a multi-dimensional infrastructure network covering airspace management, flight route planning, and deployment of digital base stations. Third, we're jointly expanding into international markets across Southeast Asia, Africa, and South Asia to develop integrated land, air, water transportation solutions. Our goal is to a globally connected low altitude economy ecosystem, promote the adoption of Chinese standards worldwide, and bring safe, intelligent air mobility to more regions across the world. At the same time, we're establishing low altitude aircraft testing sites across multiple regions to evaluate performance under extreme conditions such as high altitude. High temperature, high salinity, low temperature, and severe weather conditions. Continuous testing and the refinement will help enhance the resilience and safety of our aircraft. In Guangzhou, we are working closely with the government authorities and construction partners. Transform the area surrounding our new headquarters into an aerospace industry hub, promoting industrial clustering, accelerating the deployment of standardized infrastructure, and promoting the growth of low altitude economy. Currently, the construction is already underway.In addition, we're also actively expanding our businesses into other applications such as logistics and emergency rescue. Our logistics autonomous aerial vehicle. Have already completed multi-round trip flights between Guangzhou and Zhuhai covering distances of up to 200 kilometers. With the upcoming launch of our VT 35 series, we expected to further enhance our long range high efficiency logistics capabilities. Emergency rescue is another major focus area. The growing use of UAVs offers new solutions for high-rise firefighting, forest firefighting, search and rescue and medical transport.Yeehan has developed a new generation of specialized UAVs tailored for these use cases. These aircraft have already been used in multiple emergency drills and have drawn strong interest from China's Ministry of Emergency Management and National Firefighting authorities. These products have already received initial purchase interest. As these products near finalization, we expected them to begin generating sales later this year. And contributing to our revenues this year. In addition to advancing low altitude products, Yihan is exploring our collaborations with the general aviation sector. We've launched a pilot initiatives through different approaches for integrated trial operations of low altitude aircraft in general aviation airports in Guangxi, Hezhou, Beijing, Pinggu, and Fengshan, Hainanwanning. We're also planning additional projects in Yanhui Hefei, Guangzhou and Hainan.Liao, as our operations in airports and the network expands in the future, we expect to unlock greater deployment potential for our full range of aircraft. As China's low altitude economy continues to gain momentum, Yihan, as a recognized industry leader, is attracting increasing interest from cities and enterprises nationwide. Our products, operational philosophy and unwavering commitment to safety are gaining broader recognition and acceptance across the market. In the first quarter, Yihan was featured in over 19,000 domestic media reports, including coverage from the CCTV Spring Festival Gala national television networks, newspapers, and the major online platforms, reaching an estimated 80 billion views. Internationally, we were mentioned more than.3,600 times across media outlets in the UK, France, Spain, the US, Japan, and other countries, generating a global reach of over 1.69 billion views. E-house products have been featured at a wide range of low altitude economy exhibitions and forums both in China and internationally.Our brand has earned strong regulation at home and abroad. Internationally, our global flight footprint continues to expand in the first quarter. Our 216 successfully completed the demo flights in Benidorm, Spain and in Mexico. In Thailand, our local partners have started working with the National Air Traffic Control Authority to conduct preliminary route and site assessments in Phuket. And operational team is already in place, aiming to launch commercial trial flights within Thailand's designated regulatory sandbox in the near future. Looking ahead to the rest of 2025, we will continue advancing both operations and product sales with a clear focus on building diversified revenue streams. We are confident in our growth momentum over the next few quarters and remain fully committed to achieving our full year revenue target of RMB900 million. Now I'll turn it over to our CFO Connor to walk us through the financial results.Thank you.
Chia - Hung Yang
Hello everyone. This is Connor. Before I go into the details, please note that all numbers presented are in RMB unless otherwise stated. A detailed analysis is available in our earnings press release on the IR site. Total revenues were RMB26.1 million in Q1 2025, a decrease compared with the Q1 last year and Q4 2024. This change is primarily driven by decreased sales volume of EH216 series products, as our COO mentioned earlier, although there was a short-term decline in performance in the first quarter, this doesn't affect the company's long term growth trend. In fact, we have observed a significant improvement and growth in potential orders and deliveries in Q2, which keeps us confident in the company's future performance. Gross profit was RMB16.3 million in Q1, and gross margin improved to 62.4% compared with the 61.9% in the same period of 2024 and 60.7% in Q4 2024. The increase in gross profit was mainly benefited from the higher average selling price of EH216 series products, indicating that our products have strong market competitiveness and pricing power.Turning to expenses, total operating expenses in Q1 were RMB110 million. A quarter on quarter decrease of 31.6%, mainly due to a significant reduction in employee compensation and share-based compensation expenses. Adjusted operating expenses which exclude share-based compensation expenses were.RMB63.6 million in Q1, up 16.8% year over year and down 19.3% from the previous quarter. The year on year growth is due to the company's continuous expansion of key positions and recruitment of talents. Support sustainable business growth, leading to an increase in overall employee compensation expenses. Meanwhile, we continue to invest in R&D to maintain our technological leadership. The quarter on quarter decrease reflects our achievements in cost control and efficiency optimization. Adjusted net laws. Was RMB31.1 million in Q1 primarily driven by a decline in deliveries in the quarter. While this represents decline compared with an adjusted net income of RMB36.4 million in last quarter, we believe the impact is only temporary. As the deliveries recover and continue to grow in the coming quarters, we expect the financial performance to gradually improve accordingly. The company still has sufficient capital reserves as of March 31, 2025, cash, restricted deposits, and short-term investments totaled RMB1.11 billion, giving us solid flexibility to support upcoming R&D investment, production scale up, and commercial deployments.With the achievement of the important OC milestone in Q1 and the EVO commercial operations to be gradually launched going forward, we're confident in our business growth throughout the year. As such, we're maintaining our annual revenue guidance of RMB900 million for the. In the year 2025, we believe that the market increasingly recognized Yihan's commercialization capabilities and the low altitude economy industry continues to gain momentum. We are able to continuously create value for our shareholders over the long term.Thank you.
2 year revenue guidance of the RMB900 million unchanged. I was wondering, could you please just give us an outlook on which in which quarter we could probably see a significant growth in both the sales and as well as the deliveries, so just to give us an a look on that so that's.Q1 performance declined due to several factors. First, seasonal impacts from winter and Chinese New Year holidays, which typically create slow delivery periods in the first quarter. Second, as we enter the new physical year, customers require time to Finalize their annual budgets, especially for a government procurement, which involves longer approval cycles. Third, anticipating OC certification, some customers delayed their orders until after certification was granted, which pushed these sales beyond Q1.However, after obtaining OC certification, our internal data shows improvements in both Q2 delivery volumes and sales. Large orders from customers in Jilin, Jiangxi, Guizhou, Hainan, Anhui, and Guangdong that were negotiated in Q1 will begin converting into contracts and deliveries in batches starting from Q2. Therefore, we maintain our full year revenue guidance of RMB900 million unchanged.Thank you.And thank you for your answer and a follow up question. I've noticed that in the reporting period 2 EH216 operators, including one of yours wholly subsidy owned subsidy have. Retained the ROC from the CAC enabling commercial operations. I was wondering on average, how long will it take for a EH216 owners to get the certificate on on the certificate. And how many more operators may get the approval of commercial operations this year. Hopefully, that will translate into more deliveries and the scaled operation fleet in the second half of the year. So that's my second question.Thank you.
Huazhi Hu
This is Wang Zhao. I'll also take your second question. Yihong General Aviation and Hefei Heyi are the first two operators nationwide to receive operating certificates for, the unmanned civilian aircraft. The OC issuance actually clarifies the regulatory standard and framework, which should reduce application timelines for future operators. At the moment, many of our customers operating companies are currently in the application process.Thank you.
Operator
Laura Lee, Deutsche Bank.
Laura Lee
Hey, thank you for taking my question and, congrats on the OC award. So my question is about the competition. So we have seen some of your peers start to win orders recently. Most of them are with different designs like tilt rotor or like legs and. Ru, but some of those have applied for TC like 1 or 2 years ago ahead of our BT 35, so, and they might be granted maybe next year or so. So how should it have stay like competitive going forward, especially beyond our current like multiculture design.
Huazhi Hu
Urban air mobility and intra-city air transport serve different markets with very distinctive requirements.Urban operations need small footprints, high density networks, quick turnarounds, and cost efficiency, while intercity requires long range. These markets aren't directly competitive with each other. The real competition comes from traditional ground transportation.Say cars, from urban travel and high speed for intra-city routes. Compared to other designs, our 216S multi-copter configuration has a compact 6 m times 6 m footprint, making it lightweight with minimal infrastructure requirements for takeoff and landing sites.This enables larger scale deployment in tourist areas and urban environments. In contrast, aircraft with 10+ meter wingspans like tilt rotors and lift and cruise models would require expensive large-scale airport infrastructure, which makes it impractical for dense urban deployment.Our economics are also superior. The 216S sells for only 2.9 RMB39 million domestically.Which is significantly below our competitors' large aircraft priced above RMB10 million. Our autonomous flight approach eliminates pilot training and employment costs. As we gather and accumulate more operational data, our continued airworthiness programs enable significant cost reduction, strengthening our competitive position.Last but not least, we are leveraging our first mover advantage through continuous technology and product development. For EH216S upgrades, we are developing more efficient motors, fast charging batteries, and solid state battery solutions. For long range products, our VT 35 is progressing through PC certification.When it is launched, it will offer superior pricing and competitiveness compared to other long range evio products.Thank you.
Laura Lee
Okay, thank you for the color. That's very.Helpful.Can check on it for.
Operator
Shen Wei, UBS.
Shen Wei
Thank you management for taking the question. Got 3 questions. First one is on your delivery. When are we expecting to see sales growth? Are we able to achieve growth in the first half of the year? Second question is with regard to the order guidance. Can you please share some color on the, order guidance, as of May? And last question is on when are we able to see the operator commenced commercial operation because infrastructure wise, it's almost ready. So these are the three questions.
Chia - Hung Yang
This is Conor. I'll take your question on, new order guidance. As I've explained, to one the sales was impacted. However, due to the seasonal factors as well as the OC certification progress. However, we believe it is temporary and we have already seen our orders and that the number of clients, have picked up in 22, which.The sales is quite strong. Therefore, we maintain our full year revenue guidance of RMB900 million unchanged. Additionally, many large orders are progressing at the same time. So as we, near or finalize those contracts with our clients, we will disclose them as we previously do. So that's on your first question on your new order guidance.
Zhao Wang
So, this is Wang Zhao. I'll take your second question. So actually, the operator in Hefei has already started the operation. However, we're taking a phased approach. At the first approach, currently phase one, it's only limited to internal employees and invited passengers, and employees can already book flight experiences through our ticketing platform. And in phase two, it's, we will open ticket sales to the general public.This is it.Thank you.
Operator
Wade Wu, Jefferies.
Sorry, I was on mute. A couple of questions. First one is on the timeline for inaugural flight ceremonies. When are we expecting the formal commercial operation at the Guangzhou and Hefei?My second question is on the end customers who are supplying OC.Uber says that, around 5 operators are going to obtain OC. Certificates by the end of the year. Are there any updates on that?
I'll take your questions. Guangzhou and Hefei operators are conducting trial operations following the OC certification.But what I say is that safety remains paramount for sustainable low altitude economy deployment development. Like I said earlier, we're implementing our phased operational approach. Both operators at Guangzhou, Saigangg Terminal and Hefei Logang Park have entered manned trial operations. Initially serving internal employees and invited passengers through our booking platform. Once we accumulate sufficiental operational experience, operators will open public sales since operations are already underway, so inno ceremonies aren't necessary.And with regard to the progress on OC applications from other clients, our customers with with substantial fleets are right now actively preparing OC applications. For instance, our Wen Chung customer has assembled a professional team with our guidance and submitted to their application, which the East China Regional Administration has accepted for review.Thank you.
Operator
Fuyin Liang, Bank of America.
Fuyin Liang
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Operator
Yiming Wang, China Renaissance.
Yiming Wang
I think it might have been for taking my question.With the current commercialization progress, and the operational status after receiving the OC, I was wondering whether, the company has conducted any preliminary assessment or survey. What is the daily revenue and also the passenger flow, slash traffic is like.And how much revenue does that trans translate into on a daily basis?
I will take your question. The two certified operators have begun trial operations, maintaining regular daily flights to accumulate operational experience and data while testing our booking platform. And as, we, more customers obtain.OC in a second starting from 22, we are going to see a larger fleet and more operators will begin their trial operations. We expect the number of trial operations to grow to even 1,000 flights, and we are expecting that number to grow even further as more customers obtained their OCs.Into the rest of the year.Thank you.
Operator
[Ron Yangzu, Scitech].
Thank you for taking my question. Got two questions. One is on the list and cruise product. What's the progress like on the product airworthiness certification. Second question is on the overseas market expansion. What's this progress like? Is it okay for the management to share some color on that?
Zhao Wang
This is Wangzhong.VT 35 assembly is complete.Building on the VT 30, we have upgraded key components including configuration, flight control, and propulsion systems, achieving a far superior design, more reliable flight performance, and reduced size. We will officially launch the Yihan VT 35 series in Q3 this year.As for VT 35, it is currently undergoing comprehensive flight testing.And CAAC, China Aviation Administration of China, has formally accepted our type certificate application.Built on our successful 216 as certification experience, we expect an accelerated VT 35 certification progress.With regard to your question on international market expansion progress. Actually in Q1, we have conducted successful flight demos in Benidorm, Spain and Mexico.Ihan has now operated in 20 countries globally.With our progress in Southeast Asia, we plan to launch commercial operations in Thailand first. Our partner in Thailand, is collaborating with the National Air Traffic Company on route and site surveys in Phuket. The operational team is established and we are working to begin operations in Thailand's sandbox pilot zone.
Operator
Fuyin Liang, Bank of America.
Fuyin Liang
Thank you, management, for taking my question. You briefly talked, you talked about the, you're expecting a significant growth in sales, in Q2, as well as the deliveries in Q2. So the way I understand it, as you deliver more, As you ship more to clients, which will translate it into revenues. So I assume there's going to be significant revenue increase in the second half of the year. So is that so? And my second question is on the gross profit margin. The Q1 gross margin improvement was partly due to the ASP gains. So can management share the reasons or give us a breakdown on the delivery volumes by the models shipped?Thank you.
Chia - Hung Yang
This is Carter. I'll take your first question. You're absolutely right. Q2 is showing very strong sales growth, and we're expecting very strong year over year growth. And as we negotiate and engage more clients, and according to their actual needs, we can tell that in the second half of the year, we're going to expect much stronger year over year revenue growth.And on your second question, for the past 2 to 3 quarters, since there were a lot of large orders which we have, which we give discounts to, however, in 11, we delivered 11 216.And these are retail customers, so we're selling them at RMB2.39 million per unit without any discount, pushing up the average selling price. Additionally, since we are having a bigger volume of procurement, so that brings the total boom down on a year over year basis in Q1. So these two factors contributed to the improved gross profit margin in Q1.Thank you.
Operator
Xuxia, Guosen Securities
Thank you management for taking my question. This is Chen Yu, gender and analyst, from Gongpa Securities.Actually, my questions are pretty much echoed what other analysts have touched on. I just want to clarify and double check on a few details. First one is on the base, capacity at Yunfu and also the Hefei Industrial Park. Can the management give an update on what's the planned production capacity for our health facility as well as the timeline in terms of its progress. And my second question is on the SGNA expenses in Q1, it showed, it declined on an adjusted term terms. I was wondering if the management or the company is, maintaining the SGNA expense ratio at 40% gross guidance, unchanged.Thank you.
Zhao Wang
This is Wangzhou.In 11, the launched expansion and upgrade at our Yunfu facility, which has doubled, the main factory gross floor area to 48,000 square meters.And with the enhanced automation, we plan to increase the total annual production capacity to 1,000 units by the end of the year.And in Hoei, we have also announced a strategic partnership with the JAC Motors and Kuoshan Holdings to establish a modern low altitude aircraft manufacturing base. According to the government plan, the completion is expected within 1 to 2 years from now.Currently, we are building a transitional or makeshift facility with completed infrastructure and ongoing equipment installation. Also, I want to mention that our factory site selection in Beijing and Weihai is complete, with construction now underway.
Chia - Hung Yang
This is Connor. Cost and expense management is a key focus this year for the company. We have already seen the results reflected in Q1 financial results. It shows quarter over quarter decrease in the pre-adjusted expenses. We will continue, maintain stringent control on the SGMD SGNA expense growth in the coming quarters. While maintaining our full year revenue guidance of 900 million unchanged, we will keep our 40% operating expense gross guidance for the full year of 2025.Thank you.
Operator
(inaudible), Securities.
Thank you management for taking the question. I was wondering how the management and the company perceive the recent narrative or statement from the NDRC because according to the NDRC recent statement about expanding low altitude economy applications, it should follow cargo for passengers.Isolation before integration and suburbs before urban areas principle. So just wondering what's management's view on that statement.
Ehan has always prioritized safety since its inception. For our 2 OC certified operators, they will follow a three-phase approach, cargo trial operations, passenger trial operations, and then routine passenger operations, ensuring safe, stable transition to commercial operations. Both operators at Guangzhou Saigon Terminal and Hefei Zogang Park have entered passenger trail operations.The low altitude economy is developing rapidly, with many new entrants. Well, from Ihas experience, ensuring aircraft safety is always paramount. So the NDRC's guidance emphasizes industry-wide safety requirements.Thorough research and validation must go ahead before passenger aircraft development and production. In this regard, Ihan has invested over 10 years in this development. And additionally, the low altitude, Office of low low altitude office of NDRC has continuously tracks the e-han passenger operations through regular communication meetings.Thank you.
Operator
Thank you. Seeing no more questions in the queue, let me turn back to Miss SAM for closing remarks.
Thank you, operator, and thank you all for participating on today's call. If you have further questions, please contact our IR team by email or participate in the following investor events through the calendar information provided on our IR site. We appreciate your interest and look forward to our next earnings call.Thank you.