Incident: On August 23, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 2.547 billion yuan, an increase of 5.58% over the previous year; achieved net profit of 0.604 billion yuan, an increase of 9.47% over the previous year; and realized net profit of 0.594 billion yuan without return to mother, an increase of 9.84% over the previous year.

The main new materials business grew steadily, and total revenue/profit completed 51%/55% of the annual business plan. On the revenue side, the company achieved revenue of 1.23 billion yuan in 2024Q2, an increase of 5.97% over the previous year. Revenue for the first half of the year completed 51% of the full-year operating plan.

On the profit side, the company achieved net profit of 0.253 billion yuan in 2024Q2, an increase of 16.44% over the previous year. The total profit for the first half of the year completed 55% of the full-year operating plan. By business, the first half of 2024 1) The aviation new materials business achieved revenue of 2.518 billion yuan, an increase of 6.12% year on year, mainly due to the increase in delivery of major pre-impregnation and carbon brake products in the current period; realized net profit of 0.633 billion yuan, up 10.25% year on year, mainly due to increased delivery of aeronautical composites and carbon brake products; 2) The aviation advanced manufacturing technology industrialization business (including high-end intelligent equipment) achieved revenue of 15.7349 million yuan, 25.212 in the same period last year Million yuan was mainly due to a year-on-year decline in sales of general machine tools and special equipment; net profit to mother was 11.6461 million yuan, a year-on-year loss of 0.3353 million yuan, mainly due to lower labor costs and reduced delivery of low-margin products.

According to the branch, while building a new production line, aviation industry composites improved overall supply chain collaboration. In the first half of the year, it achieved operating income of 2.401 billion yuan, an increase of 3.82% over the previous year; achieved total profit of 0.712 billion yuan, an increase of 4.36% over the previous year; and achieved net profit of 0.618 billion yuan, an increase of 6.04% over the previous year. In response to the increase in domestic and foreign market orders, Premium Bermuda rationally formulated production plans and made timely dynamic adjustments to strengthen lean production management to ensure product quality on the basis of on-time delivery. The first half of the year achieved operating income of 0.117 billion yuan, an increase of 105.68% year on year; achieved total profit of 15.6034 million yuan, an increase of 19.0455 million yuan over the previous year; achieved net profit of 14.5038 million yuan, an increase of 17.9438 million yuan over the previous year. In terms of profitability, in the first half of 2024, the company's gross sales margin was 37.25%, down 0.43 pct; the net sales margin was 23.98%, up 1.2 pct year on year. The company achieved remarkable results in improving quality and efficiency, and production efficiency and operation quality improved steadily.

Cost control is good, and production preparation is active. In terms of expenses, the company's 2024H1 three fees accounted for 6.09%, a year-on-year decrease of 1.15pct. Among them, sales expenses ratio, and financial expense ratio were 0.59% (0.01pct decrease year-on-year), 6.12% (1.08pct year-on-year decrease), and -0.62% (year-on-year decrease 0.06pct), respectively. At the R&D level, the company's 2024H1 R&D expenses were 62.9383 million yuan, a year-on-year decrease of 6.73%, mainly due to individual R&D projects starting to be implemented in the third quarter. According to forward-looking indicators, as of 24Q2, the company's advance payments increased by 22.54 million yuan from the beginning of the year, up 133.84% year on year, mainly due to an increase in prepaid equipment payments and prepaid material payments for aviation industry composites; accounts payable increased by 0.58 billion yuan from the beginning of the year, an increase of 57.35% year on year, mainly due to an increase in procurement of materials for aviation industry composites, and the company is actively preparing for production and preparation.

Investment suggestion: Considering the company's annual business goals and completion progress, we adjusted the profit forecast. We expect the company's revenue for 2024-2025 to be 5.168 billion yuan and 6.094 billion yuan (previous value 6.862 billion yuan, 8.742 billion yuan), and net profit to mother is 1.137 billion yuan and 1.359 billion yuan (previous value 1.278 billion yuan, 1.68 billion yuan), respectively, adding 2026 Annual revenue of 7.023 billion yuan and net profit to mother of 1.656 billion yuan. The corresponding EPS is 0.82 yuan, 0.98 yuan, and 1.19 yuan respectively, and the corresponding PE is 22.7X, 19.0X, and 15.6X, respectively. As a leading pre-impregnation agent, the company is leading in military strength and actively lays out civilian products, and its performance is expected to continue to grow and maintain a “buy” rating.

Risk warning: Risk that military aircraft installation progress falls short of expectations; civil aircraft project construction falls short of expectations; machine tool business transformation falls short of expectations; performance forecasts and valuation judgments fall short of expectations.