Event: the company releases its 2023 half-yearly report. In the first half of 2023, the company achieved operating income of 623 million yuan, down 3.06% from the same period last year; net profit of 249 million yuan, up 18.22% from the same period last year; and net profit of 246 million yuan, up 16.99% from the same period last year.

The operating income is stable and the expenses are reduced as a whole. In terms of revenue, the company's main business is divided into three parts: aircraft brake control system and wheels, brake discs (pairs), testing and testing. During the reporting period, the revenue of the aircraft brake control system and wheel business was 354 million yuan, accounting for 56.87% of the total business revenue, an increase of 0.09% over the same period last year; the revenue of the brake disc (deputy) business was 65.6671 million yuan, an increase of 154.01% over the same period last year, which is due to the company's rapid penetration of civil aviation business and good market development. The revenue of the testing and testing business reached 195 million yuan, a decrease of 24.62% compared with the same period last year, which is due to the phased adjustment of the downstream customer procurement plan of the subsidiary Jinghanyu and the changes in the market prosperity of the electronic components testing industry.

At the same time, corporate fees fell overall. Among them, income tax expenses decreased significantly, by 23.94% compared with the same period last year, due to the 15% income tax rate enjoyed by the current holding subsidiary Jing Hanyu's high-tech enterprises; the various taxes paid were reduced by 56.75% compared with the same period last year. It is because the current holding subsidiary Jing Hanyu enjoys a 15% income tax rate for high-tech enterprises, and more input tax can be deducted in the current period.

The military and civilian market is vast, benefiting from the installation and volume of main combat equipment. The strategic goal of China's national defense and army building in the new era will support the national defense industry to maintain a high degree of prosperity. The company's main products aircraft brake control system and wheels, brakes (auxiliary), landing gear and testing tests are widely used in fighter planes, bombers, transport aircraft, trainers, military trade aircraft, helicopters and aerospace high-altitude aircraft and other key military equipment, the future may benefit from the installation of main combat equipment. The aircraft brake products produced by the company have a certain service life and replacement cycle, with the increase of the frequency of actual combat exercises and flight training hours in the military industry during the 14th five-year Plan, the replacement and maintenance cycle of the main war model wheel and brake disc consumables products may be shortened, the company may directly benefit. In addition, the domestic substitution and independent controllable demand in the civil aviation market is relatively high, and it is expected to usher in a recovery in the future. during the reporting period, the company actively developed the application of brakes in the civil aviation market and achieved remarkable results, and civil aviation business grew faster than the same period last year. Looking to the future, civil aviation business and landing gear business are expected to become an important part of the company's business in the future.

The company has remarkable ability of independent scientific research and innovation, and grasps both military and civilian markets. In terms of research and development, as a leading enterprise in aviation braking, the company has formed a research and development team with chief engineer and deputy chief engineer as the core technical backbone, covering materials, machinery, automation, aviation manufacturing and other specialties. it has accumulated rich technical research and development experience in the field of aviation braking, ensured the continuous innovation and iteration of the company's products and technology, and won a number of important awards. The company actively carries out industry-university-research cooperation with Tsinghua University and Beijing University of Aeronautics and Astronautics to attract practical high-end technical talents. the core backbone of the R & D team mainly comes from first-class universities such as Tsinghua University. it has become a team of scientific research talents with rich technical background and outstanding ability to tackle key problems. The company has won "National key New products Award", "Beijing Science and Technology Award third prize" and other honorary awards, with a number of national defense patents, invention patents, utility model patents, international patents, non-patent technology. In the market, while focusing on the core business of the military industry, the company actively develops the application of brakes in the civil aviation market, and the civil aviation business is growing rapidly compared with the same period last year.

The management goal of the whole year of 23 years is to improve the independent innovation ability of enterprises and promote the coordinated development of military and civilian products.

In terms of brake control system and wheels, the company will continue to develop wheel products to meet the needs of China's military aircraft based on its main industry and based on the improvement of its own technical level and changes in market demand. In terms of landing gear, we will promote the development of new products and improve the international leading aircraft landing system test center to further enhance product integration and added value, so as to increase market share. In terms of civil aviation, we should speed up the process of domestic substitution and self-control from the aspects of product quality, cost control and service guarantee. In the field of preloading market, the company aims at the national "large aircraft" development strategy, enters the domestic commercial aircraft market, and strives to obtain the US Federal Aviation Administration certification representing the highest level of international civil aviation parts manufacturing in the future. In terms of high-speed rail brake pads, we will further open up and develop the market space of high-speed rail brake pads, increase investment in this field and speed up the pace of industrialization, and develop multi-model high-speed rail brake pads products to bring new profit growth points for the company.

Investment suggestion: the company is the leading enterprise of aviation brake brake, holding a number of core technologies, benefiting from the rising market demand. According to the model, the company's performance is expected to keep rising steadily. From 2023 to 2025, the net profit is expected to be 505 million yuan, 638 million yuan and 779 million yuan respectively, and the EPS is 1.52,1.92,2.35 yuan respectively. Give a "buy" rating for the first time.

Risk tips: military procurement is not as expected; civilian market expansion is not as expected; technology can not maintain advanced nature; macro environment changes.