Incidents. On August 6, the company released its 2024 semi-annual report. In 2024 H1, the company achieved operating income of 2.738 billion yuan, an increase of 21.28% year on year; realized net profit of 0.162 billion yuan, an increase of 109.79% year on year; realized net profit of 0.149 billion yuan after deduction, an increase of 135.27% year on year.

Deepen the global layout and help the company's performance grow steadily. The company responds positively to national policies, deeply explores the field of emergency communications, closely follows the “Belt and Road” development strategy, continuously deepens global channels and market layout, and makes simultaneous efforts at home and abroad to promote steady growth in the company's performance. In 2024 H1, the company achieved operating income of 2.738 billion yuan, an increase of 21.28% year on year; realized net profit of 0.162 billion yuan, an increase of 109.79% year on year; realized net profit of 0.149 billion yuan after deduction, an increase of 135.27% year on year. The Q2 2024 quarter achieved revenue of 1.473 billion yuan, an increase of 16.37% over the previous quarter. The company's ability to control expenses improved in the first half of 2024. The cost ratio decreased 4.11% year on year during the period. Among them, sales expenses decreased by 12.93% year on year and management expenses increased by 22.08% year on year; the company achieved a gross profit margin of 45.83% in 24H1.

Continue to improve the product layout, and increase the issuance of trillions of treasury bonds to benefit related emergency communication products. As the world's leading provider of dedicated communication equipment and solutions, the company continues to deepen the “2+3+1" product layout. During the reporting period, the company successfully launched the H series IIB explosion-proof terminals, and vigorously promoted the H series IIC explosion-proof terminals, new-generation TETRA conventional and explosion-proof terminals, emergency communication industry products, and lightweight integrated base stations. In the field of public-private integration, the company launched PDC580 and TPC560 products for the railway industry to meet the broad and narrow converged communication needs of users in the railway industry. In the field of command and dispatch, as of 2024 H1, the company has built more than 2,000 detailed business labeling systems, realized a series of intelligent models and practical applications, and has been put into use in Hubei, Sichuan, Fujian, Shanxi and other provinces. In the field of emergency communications, the company has successively released second-generation narrowband ad hoc network U3, U1, and V band fixed station products, fire industry ad hoc network base station products, broadband ad hoc network L-band airborne versions, and integrated portable products. Also, driven by the favorable trillion treasury bonds, the company is speeding up the construction of a dedicated emergency network. Since Q2 2024, various provincial and municipal engineering warning and command special treasury bond projects have been intensively launched, and the company has successively won bids for emergency projects in Hunan, Heilongjiang, Beijing and other provinces. In terms of urban rail transit, subway projects in cities such as Hefei, Shenzhen, and Nantong that the company participated in have successfully opened and operated, and won bids for some subway line communication projects in Shenzhen. In the 4G/5G mobile broadband field, the company provides 4G DU boards for operators, which has become the mainstream solution for the LTE part of domestic open architecture dual-mode base stations. With the promotion of the trillion-dollar treasury bond project, the company continues to make efforts in the field of domestic emergency communications, boosting the steady growth of the company's performance. At the same time, the company is accelerating the expansion of overseas business, closely following the country's “Belt and Road” development strategy, and focusing on developing markets in countries along the route. In 2024 H1, the company built Latin America's leading TETRA dedicated communication network for Mendoza Province in Argentina, helping Pakistan's new international airport to successfully fly, and won bids for multiple projects in Latin America and Europe. For overseas markets, the company released a new compact command and dispatch platform product that is easy to deploy, and has been promoted and applied in ASEAN, Latin America, Africa, the Middle East, etc.; the company's HyXG 4G RAN solution based on an open architecture design has been tested by dozens of overseas telecom operators and has been supplied to operator customers in Central Asia, the Middle East, Africa and other regions.

Actively expand automotive electronic energy storage products, and the EMS business unleashed strong growth momentum. The EMS business is based on high-end manufacturing capabilities and revolves around three key areas, including new energy and automotive electronics, intelligent robots, communications, and servers. In the first half of 2024, the company focused on the electronic direction of new energy vehicles. The company's customers covered most of the world's leading power battery manufacturers and leading domestic NEV manufacturers. The product service terminal models covered popular models such as Tesla, Extreme Krypton, Wanjie, Xiaopeng, Ideal, Volkswagen, and BMW. In addition, the company has also reached strategic cooperation with leading domestic Internet retail technology companies to enter the field of low-altitude economy and enhance supporting capabilities in the field of low-altitude economy. In May of this year, the company's MESH ad hoc network products were commercialized in drone ad hoc network digital transmission products, mainly to provide customers with communication services for emergency response and disaster relief applications. In the field of satellite communications, the company cooperates closely with leading domestic research institutions and companies in related industries on joint research projects, etc., to jointly apply for research projects related to key low-orbit satellite broadband Internet technologies. In overseas markets, the company's satellite communication products have achieved large-scale sales in “Belt and Road” regions such as Central Asia, South Asia, the Middle East, and Africa. We believe that as the company's products and market layout continue to deepen, the trillion treasury bond project will benefit the company's emergency communications business, and the expansion of automotive electronic energy storage and satellite communication products will also bring new growth points, and the company's performance is expected to improve steadily in the future.

Profit forecasting and investment ratings. We predict that the company's net profit for 2024-2026 will be 0.408/0.559/0.702 billion yuan, and EPS for 2024-2026 will be 0.22/0.31/0.39 yuan, respectively. The current stock price corresponding to PE is 17/13/10 times, respectively. As the company accelerates its global market layout and projects land one after another, we continue to be optimistic about the company's future performance development and maintain a “buy” rating.

Risk warning: Risk of market development falling short of expectations; competition in the dedicated communications industry increasing risk; risk of rising supply chain costs and shortages; risk of exchange rate fluctuations.