Key investment events: The company released the 2015 interim report, with operating income of 901.1297 million yuan, an increase of 10.457,800 million yuan over the same period last year, an increase of 1.17%; realized operating profit of 37,7399 million yuan, an increase of 5.496 million yuan over the same period last year, an increase of 17.04%; and net profit attributable to listed shareholders was 22.2084 million yuan, down 229,700 yuan from the same period last year, a decrease of 1.03%. The revenue and gross margin of domestic trade aviation and derivatives both increased, mainly benefiting from the performance growth of the subsidiary China Airlines Kazakh and small-batch production and delivery of research projects: the company achieved revenue of 18,95665 million yuan, an increase of 12.0756 million yuan over the same period last year, an increase of 6.80%; and the gross profit margin of domestic trade aviation and derivatives products was 36.78%, up 7.68% from the same period last year. The increase in revenue and profit of domestic aviation products is mainly due to: 1. The company's holding subsidiary, China Aviation Industry, has shown a significant increase in performance in the past two years. Sales revenue, profit, etc. have all shown a relatively good growth trend. Currently, its growth level and profitability are higher than the company's other domestic trade aviation and derivatives; 2. The company still has many ongoing research projects, and some projects have gradually switched to small-batch production and delivery. The development and technological transformation of these projects will bring continuous performance growth to the company. Revenue from foreign trade products increased, gross margin declined, and there is still room for improvement in the future: the company achieved a total sales revenue of 610.2994 million yuan, an increase of 43.7519 million yuan over the same period last year, an increase of 7.72%. However, due to factors such as product price reductions and rising labor costs, the gross margin level of foreign trade fell 6.44 percentage points from the same period last year. In order to cope with the decline in gross margin of foreign trade products, the company is actively carrying out management promotion activities to “reduce costs and increase efficiency”. Through implementation of strengthening internal management control and sorting out production processes, the company has achieved cost reduction and maintenance processes. The ultimate goal of continuous profit is still room for improvement in the future. The civilian goods business expansion strategy contracted, and gross margin increased: the company achieved industrial civilian goods revenue of 86.883 million yuan, a decrease of 42.2251 million yuan from the same period last year, a decrease of 32.72%; however, the overall gross margin of the company's civil goods projects increased by 3.67 percentage points over the same period last year. The company's civil goods projects mainly use the advantages of aviation technology to expand civilian industrial products, and the expansion of civil goods projects is based on the fact that the company's subcontracted projects had surplus production capacity; in the first half of this year, tasks such as new product trial production and product delivery for the company's subcontracted product projects were relatively full, so in the face of intense competition in the industrial civilian goods market and poor product profitability, the company appropriately slowed down the expansion of the domestic civil goods market. Increased investment and further improved core competitiveness: In the first half of 2015, the company issued a total of 91 investment plans, with a planned investment of about 180 million yuan. A total of 284 units (sets) of equipment will be added, 2 equipment modifications will be carried out, 19 construction and safety projects will be implemented, etc. The orderly progress of these investment projects will further enhance the company's core competitiveness in machining. Profit forecast and investment recommendations: We expect the company's 2015-2017 revenue to be 21.58, 25.38, and 3,028 billion yuan, up 9.94%, 17.62%, and 19.31% year on year; net profit attributable to shareholders of listed companies is 0.55, 0.59, and 69 billion yuan, up 86.36%, 6.21%, and 18.41% year on year; corresponding EPS is 0.17, 0.18, and 0.21 yuan. The company was given a target price of 50 yuan, and a “buy” rating was given. Risk warning: Major aero engine projects have been postponed, development of key aero engine models is progressing slowly, and military stock valuations are too high.