Event: The company released its 2024 semi-annual report. 2024H1 achieved revenue of 0.637 billion yuan (yoy +21.02%), net profit attributable to mother of 0.006 billion yuan (yoy +56.54%), and net profit of non-attributable net profit of 0.013 billion yuan (yoy +3.15%). Looking at a single quarter, 2024Q2 achieved revenue of 0.393 billion yuan (yoy +12.14%), net profit due to mother 0.01 billion yuan (yoy -47.42%), after deducting non-attributable net profit of 0.006 billion yuan (yoy -70.74%).

Deeply cultivate the three major sectors of civil aviation management, urban road traffic management, and urban governance, and seize new industrial opportunities such as “low altitude”, “vehicle road cloud integration”, and data elements.

1. Traffic management in civil aviation: Continue to consolidate the leading position in civil aviation management, increase marketing efforts in the airport sector, focus on building a low-altitude flight service system, and form a “high-altitude - low-altitude - ground” integrated development pattern.

1) In the field of air traffic control: Launched automation projects in Guangzhou, Xi'an, Changsha and other places to achieve further breakthroughs in the district management market; work with strategic partners such as the General Administration of Civil Aviation, East China Air Traffic Administration, Heilongjiang Air Traffic Administration, and Shandong Air Traffic Control Administration to jointly explore industrial upgrading and technological breakthroughs.

2) Airport sector: Consolidate the application of core products in small and medium-sized airports. Newly developed products such as berth guidance systems and airport collaborative decision-making systems have been promoted at airports in Nanning, Guangxi, Jiayuguan in Gansu, Ezhou in Hubei, Tengchong in Yunnan, and Taizhou in Zhejiang. Among them, berth guidance products have been applied for the first time at Nanning, Guangxi.

3) Low-altitude field: Build core products, promote the implementation of benchmark projects, focus on the flight management platform to accelerate the development of low-altitude “Tianmu” series products, form strategic cooperation with more than 20 provinces and cities, including Beijing, Shanghai, Chongqing, Jiangsu, Anhui, Guangzhou, Nanjing, Suzhou, and Zhuhai, and have achieved phased results in some regions.

2. Urban road traffic management: Lay out the integrated construction of vehicle road clouds and continue to promote the national market.

The company released the vehicle-road cloud integrated hyperconverged terminal product “Intelligent Core”, which lays out integrated solutions such as roadside holographic sensing, V2X information communication, and cloud control platforms. It is participating in the formulation of national and group standards related to vehicle road collaboration, and is participating in the construction of signal control equipment at more than 0.04 million intersections and parking management in various cities across the country. Projects in Nanjing, Chengdu, Dongguan, Korla and other places have been implemented to provide informatization services related to “vehicle-road cloud integration” for Nanjing, Nantong, Chongqing, Zhuzhou and other places.

3. Urban governance: Accelerate the transformation of digital intelligence and promote the valuable application of data elements. Released the smart city digital platform product “Cloud Mirror”, integrating data elements ×”, digital twins, and full-scenario applications to help the efficient management and application of huge amounts of city-level data.

Investment suggestions: The company is a leader in the civil aviation management system and enjoys the logic of domestic substitution and industry expansion; the small and medium-sized airport business is expected to open up 10 billion market space; the low-altitude economy has risen to the height of a strategic emerging industry in the country, and the trillion new market drives the company's business growth. We expect the company's net profit to be 0.172, 0.232, and 0.315 billion yuan respectively in 2024-2026, and the corresponding PE will be 45X, 33X, and 25X, respectively, maintaining the “buy” rating.

Risk warning: The development of small and medium-sized airports falls short of expectations; the expansion of civil aviation management business falls short of expectations; low-altitude economic development falls short of expectations.