2024H1:1) Achieved revenue of 1.268 billion yuan, +7.12%; realized net profit of 0.152 billion yuan, or -5.95%; realized net profit of 0.149 billion yuan, +13.61% year over year; 2) gross profit margin for the first half of the year 34.37%, -2.18pct year on year; net profit margin 11.98%, year-on-year -1.67pct; net profit margin without return to mother 11.74%, year-on-year +0.67pct; 3) The cost ratio for the period was 25.48%, +1.23pct, sales/management/R&D/finance expense ratios were 1.49%, 6.77%, 12.62%, and 4.61%, respectively, with year-on-year changes of -0.02, -0.32, +0.81, and +0.76pct.

2024Q2 single quarter: 1) Achieved revenue of 0.606 billion yuan, +5.08%, and -8.56% month-on-month; realized net profit of 0.061 billion yuan, -23.33% YoY, -32.21% month-on-month; realized net profit of 0.059 billion yuan without return to mother, -3.81% YoY, -33.92% month-on-month; 2) Q2 gross profit margin of 34.43%, year-on-quarter, -1.4pct, month-on-month; YoY net profit margin 10.13%, YoY- 3.76pct, -3.54pct; net profit margin without return to mother 9.78%, year-on-year -0.9pct, -3.75pct month-on-month.

By product: 1) “Two aircraft” business: In the first half of 2024, the new aerospace materials and components business achieved revenue of 0.437 billion yuan, an increase of 19.65% over the previous year; 2) Nuclear energy nuclear power business: In the first half of 2024, the new nuclear materials and components business achieved revenue of 0.214 billion yuan, an increase of 18.39% over the previous year.

By region: 1) Mainland China: Domestic sales revenue was 0.708 billion yuan, up 5.40% year on year, accounting for 55.85% of total revenue, gross profit margin of 33.60%, down 8.63 pct year on year; 2) Overseas: export sales revenue of 0.56 billion yuan, up 9.39% year on year, accounting for 44.15% of total revenue, gross profit margin of 35.35%, up 6.26 pcts year on year.

1) There are sufficient orders in hand, and the “two-engine” business has reached a new level: In the gas turbine field, on the basis of mass production and delivery of grade 1, 2, and 3 directional hollow turbine blades made in China, higher-level G/H grade turbine blades also achieved technological breakthroughs in May this year and passed the inspection of industry experts. In the aero engine business, benefiting from increased demand in overseas aviation markets, the company continues to produce LAEP series engine cases at full capacity. The cooperative relationship with G Company and S Company has become closer, and the order scale has further expanded. 2) The nuclear power nuclear power business is on the cusp of development, and the company's business is progressing steadily: in 2022 and 2023, the National Assembly approved 10 nuclear power units; in August 2024, the National Assembly approved 11 more nuclear power units, and the demand for related nuclear power equipment and materials will be gradually released over several years. In the field of nuclear power castings, the company focused on completing the delivery of spray pump bodies for a small reactor technology demonstration project, nuclear grade 1 motor supports, and blast valves; in the field of new nuclear energy materials, the upper and lower shells of the Chinese Academy of Sciences Dewar project undertaken by the company were successfully assembled at the Science Island site, and flexible shielding material ionizing radiation protection samples for nuclear power and medical ionizing radiation protection samples were developed. It is planned to complete product certification in the second half of the year. 3) Seize the development opportunities of the “low-altitude economy” and actively lay out the low-altitude field: the company actively carried out optimization and improvement work for the YLWZ-190 engine, studied and organized the implementation of the YLWZ-190 engine power and reduced fuel consumption; cooperated with relevant units to study and organize the implementation of the YLWZ-190 engine mapping test plan for ammonia fuel; completed the assembly and testing of the YLWZ-300 engine, and delivered to a certain unit to complete the joint adjustment with the power generation system, and the engine is running smoothly; a certain model successfully competed for the hybrid package project and is making every effort to support and deliver subsequent orders.

Profit forecast: There is some uncertainty about the development stage of the low-altitude sector. We lowered our profit forecast. We estimated net profit of 0.398, 0.479, and 0.599 billion yuan (24-25 years ago values: 0.42, 0.524 billion yuan). The corresponding PE is 17.44, 14.48, and 11.58 times, maintaining the “buy” rating.

Risk warning: raw material price fluctuation risk, exchange rate fluctuation risk, industry and market risk, research projects falling short of expectations