The company achieved EPS of 0.08 yuan in the first half of 2019. During the reporting period, the company's revenue growth was stable, the gross profit rate declined and the expense rate increased, and the performance declined slightly. Taking into account the domestic alternative space in the field of aerospace electronics and the development prospect of the company's satellite big data business, maintain the company's annual EPS forecast of 0.20 to 0.25 and 0.31 yuan in 2019-20-21. Comprehensive industry comparable company valuation, as well as the company's market position in the field of aerospace electronics and satellite big data, maintain a "buy" rating, with a target price of 14 yuan.

The performance declined slightly and was optimistic about the long-term development of the company. In the first half of 2019, the company achieved revenue of 399 million yuan (year-on-year + 6.13%), net profit of 58.02 million yuan (year-on-year-1.67%), and EPS of 0.08 yuan. During the reporting period, the company's revenue grew steadily, the gross profit margin fell 2.3pcts to 38.83%, the rate of sales management expenses increased, R & D investment increased by 58.90% compared with the same period last year, and the net profit after deducting non-income decreased by 23.04%. The income from entrusting others to invest or manage assets was 11.91 million yuan, a year-on-year increase of 4 times, and the decline in net profit before deduction was reduced. In the future, with the expansion of aerospace electronics, security surveying and mapping market and satellite big data business gradually contribute to profit growth, the company's performance is expected to improve.

Aerospace electronics business: product structure changes to enhance profitability, is expected to benefit from aerospace high-density launch. The company is the leading company of domestic high-end aerospace processor SoC and stereo package SIP aerospace module / system. During the reporting period, the company's total revenue from SoC chips, SIP chips and system integration was 56.74 million yuan, down 12.8% from the same period last year, of which the revenue from high-margin SIP chips increased by 95.57%, and the overall gross profit margin of the aerospace electronics business increased to 55.19%. It is expected that in 2019, the number of space launches will exceed 30, and more than 50 spacecraft will be launched. the company has passed the audit of suppliers of supporting components for aerospace science and technology, and has become a qualified supplier at the aerospace group level. It is expected to fully benefit from the rapid development of China's aerospace and the improvement of the localization rate of aerospace chips. In the first half of the year, the company reached a cooperation agreement with the Aerospace automatic Control Institute to jointly establish a joint R & D center for micro-and nano-satellite innovation technology with the General Department of Space Engineering of Aerospace Science, Technology and Industry. With the continuous expansion of business and the continuous optimization of product structure in the future, the profitability of aerospace electronics business is expected to continue to enhance.

Satellite big data business: create a new profit growth point. Big data, the satellite of 2019H1, earned 30.448 million in revenue and 51.98% in gross profit. The company's seven in-orbit satellites are in normal operation, of which four hyperspectral satellites have collected a cumulative coverage area of about 17.71 million square kilometers in the first half of the year, achieving a total production data of about 550T at L1 level, providing data support for subsequent downstream applications. At present, 03 sets of satellites have been developed and are expected to be launched in mid-September. The company has won the bid "Green Water and Green Mountains" project in Zhuhai, which is expected to form a model to promote to more than 10 provinces and cities, and actively expand customers in agriculture, forestry, ecological environment and other industries. Satellite big data business is expected to become a new profit growth point of the company in the future.

Security, surveying and mapping and other businesses: increase investment in research and development, long-term development. The company's security business was carried out by subsidiary Platinum Information, with revenue of 145 million yuan during the reporting period, down 11.79% from the same period last year, and gross profit decreased by 3.74pcts to 30.88%. Platinum Information added R & D investment in multiple analysis platform projects based on AI front-end camera guns, and net profit fell 21.3% to 22.35 million yuan compared with the same period last year. Considering the good market continuity of Platinum Information in government, public security, justice, education and operators, the proportion of output outside Guangzhou has further increased, the market area has been expanding, and the company's security business has been improving for a long time. The company's surveying and mapping business was carried out based on the intelligence of its subsidiary, which realized revenue of 130 million yuan during the reporting period, an increase of 9.72% over the same period last year, and a gross profit margin of 40.03%, a decrease of 5.4pcts over the same period last year. Huyu Intelligence increased R & D investment in the integrated spatial planning platform, achieving a net profit of 27.65 million yuan, basically the same as the same period last year. As the future R & D projects gradually generate revenue, the company's security surveying and mapping business is expected to achieve rapid expansion.

Risk factors: satellite constellation project promotion is not up to expectations; product market expansion is not up to expectations; technical brain drain risk.

Investment suggestion: taking into account the domestic alternative space in the field of aerospace electronics and the development prospect of the company's satellite big data business, maintain the company's annual EPS forecast of 0.20max 0.25max 0.31 yuan in 2019-20-21. The current price is 11.01yuan, corresponding to the PE of 2019-20-21 is twice that of 55-44-36. Comprehensive industry comparable company valuation, as well as the company's market position in aerospace electronics and satellite big data, maintain a "buy" rating with a target price of 14 yuan (corresponding to 70 times PE in 2019)