Incident: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 0.066 billion yuan, a year-on-year decrease of 81.78%; net profit to mother was 0.039 billion yuan, a year-on-year decrease of 233.34%. Among them, Q2 achieved revenue of 0.038 billion yuan, a year-on-year decrease of 87.66%; realized net profit to mother of -0.023 billion yuan, a year-on-year decrease of 149.81%.

Product delivery was delayed, and the company's revenue performance was under pressure: due to factors such as user procurement policy adjustments, international market uncertainty, and seasonal characteristics, the product delivery schedule was delayed, and business performance declined compared to the same period last year. In the future, with the gradual resumption of deliveries, the finalization and production of the company's new models and the continuous expansion of the company's new business, the company's long-term development trend is good in the future.

There is a high demand for air defense warning radars, and the military trade has ushered in development opportunities: in the context of complex and changing international situations and ongoing geopolitical conflicts, the security demands of international countries have greatly increased, and demand for air defense warning radar products is strong; at the same time, with the continuous improvement of domestic military radar technology, the international competitiveness of radar equipment continues to increase, and military trade exports of radar equipment have ushered in good development opportunities.

Focusing on market development and new industrial layout, fund-raising projects open up room for growth: the company relies on the existing air defense warning radar military trade product range to promote international market development and enhance military trade business development capabilities. At the same time, the Low Altitude Division was established to participate in the demonstration and discussion of local government low-altitude economic development plans, and to use years of technology accumulation to carry out key technical research and new product research and development. The company raised an IPO in 2023, with a capital amount of about 0.91 billion yuan. It mainly invests in intelligent production transformation and R&D test base construction projects to improve the overall intelligent production level of radar.

Investment advice: The company has a stable leading position in the field of air defense warning radar, and the development of new models of products has opened up room for future growth. We expect the company to achieve operating income of 0.758/1.275/1.608 billion yuan and net profit of 0.093/0.165/0.218 billion yuan in 2024-2026. The corresponding PE was 48.14/27.13/20.47 times, respectively. Maintain an “Overweight” rating.

Risk warning: relatively single product structure; risk of fluctuations in military trade business; risk of price and profit margin fluctuations; risk of lifting the ban on restricted stocks.