Aerospace declined, agricultural machinery declined. The company achieved operating income of 488 million yuan (+86.58%) in the first half of 2017, achieving net profit attributable to shareholders of listed companies of 91.437 million yuan (+402.15%), net profit attributable to shareholders of listed companies of 73.751 million yuan (+2218.30%) after deduction, and EPS was 0.0614 yuan. Among them, the special equipment manufacturing (tomorrow's aerospace) sector achieved revenue of 436 million yuan, an increase of 222.91% over the previous year. In the first half of the year, the company made efforts to improve the utilization rate of machine tool spindles, carried out research on difficult processing technology, and improved assembly technology, and order and delivery rates were greatly increased. Meanwhile, the revenue of the special equipment manufacturing (agricultural machinery) sector fell 58.88% year on year, and gross margin also showed a sharp decline. The main reason is that the agricultural machinery industry is entering a period of deep adjustment after passing through the golden period. The company also expects the cumulative net profit for January-September of this year to reach 255 million yuan (+136.58%) to 280 million yuan (+161.48%). Thanks to the steady growth of military business in the aerospace sector, the net profit for a single quarter is expected to reach 162 million (+82.24%) to 189 million (+112.24%) in the third quarter. The defense business has been rising steadily, and a subsidiary has been established to expand production capacity: in the first half of 2017, the company's defense sector (Tomorrow's Aerospace) achieved revenue of 436 million yuan. Tomorrow, Aerospace, as a development platform for the company's aerospace sector, was upgraded to the east wind of the national strategy through “deep civil-military integration”, and fully connected with the “small core, big collaboration” projects of state-owned enterprises. In terms of military aircraft, it positions itself in the back garden of China's aerospace industry, invests in the construction of industrial parks in key provinces of China's aerospace industry, such as Hebei, Shenyang, Chengdu, Guizhou, and Tianjin, and actively carries out platform-level mission undertaking in accordance with the idea of specialized segmented development. In terms of civil aircraft, Tomorrow Aerospace uses COMAC's C929 project as the lead, using key composite components and most parts of large aircraft as entry points to carry out international business cooperation and in-depth technical cooperation with Airbus, Boeing, Bombardier, Israel Airlines, GE, CFM, Pratt & Whitney, and Luo. Luo and other internationally renowned aviation companies have negotiated comprehensive cooperation with their first-tier suppliers, and at the same time actively participated in the early development of the Commercial Development CJ-2000 to seize the mainstream market for large domestic aircraft and international subcontracting. Currently, the company has 105 five-axis CNC machines, 101 four-axis CNC machines, 58 three-axis CNC machines, 28 special processing equipment for composite parts, etc. The number of five-axis gantry machines it has ranks first among all listed companies for aerospace structural components, and the quality and spindle speed of the company's five-axis machine tools are at the leading level in the industry. Considering the company's current abundant production capacity, we expect that during the 13th Five-Year Plan period, with the accelerated installation of major fighter models such as the J-20, Yun20, and Direct 20, the company's performance may maintain a relatively rapid growth rate over the next three years. The agricultural machinery business has declined, and future development expectations are uncertain: the agricultural machinery industry has entered a period of deep adjustment this year due to reasons such as falling grain prices, rising costs of upgrading from country 2 to country 3, falling subsidy amounts, and the massive removal of agricultural machinery from China 2 last year. Data show that in January-May of this year, there were 21,000 self-propelled grain harvesters, a year-on-year decrease of 21.8%, and sales of self-propelled corn harvesters were 0.19 million units, a year-on-year decrease of 55.9%. Meanwhile, the central government's agricultural machinery purchase subsidy was reduced to 18.6 billion yuan this year, a reduction of 5 billion yuan compared to last year, reducing farmers' willingness to buy to a certain extent. Commercial aerospace is leading the upgrading of the industry, and the satellite business will gradually contribute to performance: during the reporting period, Tibet Tomorrow Aerospace completed technical demonstration and commercial negotiations for the “Tomorrow Aerospace 1” satellite in terms of satellite hardware, and had the conditions to sign a formal contract at any time; in terms of satellite applications, it completed the establishment of an “Information Technology Industry Consortium” led by CLP 54, organized satellite orbit declaration and coordination, and completed the application of operating licenses. It organized digital traffic leasing negotiations for traveling wave tubes, development of terminal products, technical demonstration of digital encryption technology at ground gates, and terminal customer experience Research It has laid a solid market and technical foundation for the future construction of integrated communication networks between heaven and earth. According to a report published by the American Space Foundation, the total global space economy in 2015 was about 335.3 billion US dollars, of which the commercial space industry accounted for 76%. According to market forecasts, by 2020, the total global space industry market will reach 485 billion US dollars, and the Chinese market, including launch vehicles, satellite applications, and spatial broadband Internet, will reach 800 billion yuan. Tomorrow Aerospace invested in the establishment of the holding subsidiary Tibet Aerospace in December 2016. It will use Tibet Aerospace as a platform to use China's highly reliable mature space shelf products and services to build a comprehensive space technology economy through innovative business models. In March of this year, Tibet's Mingyu plans to sign a “Major Operating Contract” with the China Academy of Space Technology (China Academy of Space Technology) to order a high-throughput communication satellite in the KA band from the Fifth Academy of Aerospace for no more than 1 billion yuan, and complete in-orbit delivery according to the contract. According to the constellation development plan for tomorrow's aerospace satellite communications, the first satellite will be built using mature technology, and the development of a new satellite will be carried out simultaneously in 2018 to ensure the launch of an internationally leading satellite in 2019, and strive to build an autonomous and controllable broadband satellite communication system with 12 satellites in orbit in about 10 years. We believe that Tibet Aerospace will launch satellites and operate independently through domestic satellite launch service providers, mainly engaged in broadband access and value-added services, and will gradually contribute to performance starting this year. Risk warning: risk of asset consolidation after restructuring; risk of tomorrow's aerospace performance falling short of expectations; risk of tomorrow's aerospace product quality and on-time delivery.