The 2019H1 results fell in the middle of the performance forecast range, CITIC Haizhi announced its results for the first half of 2019: operating income of 753 million yuan, up 19.4% year on year; net profit attributable to the parent company was 90.81 million yuan, up 112.3% year on year, corresponding to earnings of 0.15 yuan per share, falling in the middle of the performance forecast range (105% - 120%), in line with expectations. In the second quarter, revenue increased 21.3% year on year, and net profit increased 145.5% year on year. After deducting special subsidies for general aviation and one-time income from commercial housing disposal, profits increased by about 75% year-on-year in the first half of the year. We estimate that after deducting the special general aviation subsidy confirmed in the first half of the year (RMB 21.46 million) and the one-time revenue from the disposal of commercial housing in the first quarter (RMB 7 million), the company's profit for the first half of the year increased by about 75% year-on-year, mainly benefiting from the growth of general aviation transportation business. The company's gross margin increased 3.3 percentage points year on year in the first half of the year, including the gross margin of general aviation transportation business increased 5.5 percentage points year on year. The company's general aviation revenue increased 18.6% year-on-year in the first half of the year, higher than the 9.4%/9% year-on-year growth rate of general aviation flights per hour during the same period. Mainly due to the recovery in international crude oil prices, offshore oil business contract prices rose year-on-year, which led to a significant increase in gross margin. On the cost side, the company's aviation maintenance costs have risen sharply year over year. The company's aviation maintenance costs increased 66% year on year in the first half of the year (-40% growth rate in the same period last year), which is significantly higher than the 18% year-on-year growth rate of maintenance revenue, and gross margin fell 32 percentage points year on year to -11% year on year. We estimate that this is mainly due to the company delivering 5 helicopters in the first half of this year (1 in the same period last year), and the current maintenance phase where aviation materials are consumed more. Development trends We believe that the performance of the offshore oil business will lag behind international oil prices. It is expected that the increase in the offshore oil business in the second half of the year may slow down compared to the first half of the year. The offshore oil business is the company's main source of revenue and profit, and we believe that the performance of this business often lags behind international oil prices by about half a year. The average oil price in the first half of this year was about 66 US dollars/barrel, down about 7% from the same period last year. We estimate that the increase in the company's offshore oil business in the second half of the year may slow down compared to the first half of the year. The profit forecast and valuation of the company's current stock price corresponds to 32.5/29.7 times P/E in 2019/2020. Considering that the company's general aviation transportation business performance in the first half of the year was better than expected, the profit forecast for 2019/2020 was raised by 9.6%/2.9% to 1.44/157 million yuan, maintaining a target price of RMB 7.7 million and a neutral rating. The target price corresponds to 35/31 times P/E in 2019/2020, which is the same as the current stock price. Demand in the risky offshore oil market fell short of expectations; RMB depreciated sharply against the US dollar; related government subsidies were abolished.