1H performance is under year-on-year pressure, optimistic about the company's long-term development prospects

Shanghai Hanxun achieved revenue of 0.106 billion yuan (yoy -27.56%) in 2024, net profit to mother of -52.047 million yuan (yoy -252.81%), after deducting non-net profit of -58.8171 million yuan (yoy -67.42%). Among them, Q2 achieved revenue of 38.1472 million yuan (yoy -45.08%, qoq -43.96%) and net profit to mother of -42.0105 million yuan (yoy -549.01%, qoq -318.58%). Considering the short-term pressure on the company's main business revenue and the year-on-year increase in the cost ratio during the period, we expect net profit to be -0.068/0.272/0.365 billion yuan in 24-26. Considering the company's core card position in G60 Starlink and the leading broadband position in the military region, we gave the company a 25-year PE46x (comparable company average of 42x), a target price of 19.96 yuan/share, maintaining a “buy” rating.

Broadband business in military regions is under pressure, and the low-orbit satellite business contribution is increasing. 1H24 revenue and profit are being pressured by fluctuations in downstream demand. The company continues to promote market development and product development to lay the foundation for future business recovery: 1) Promoting certification and small-batch installation of tactical communication equipment; 2) Military 5G completes the selection of lightweight core networks and terminal modules and carries out equipment development work; 3) The first phase of the supply contract has been signed with excellent technical evaluation results for a certain type of drone airborne data link equipment. In terms of low-orbit satellites in the new field, the Qianfan Constellation has officially entered the actual networking stage. According to the company's interim report, 1H24 received an order amount of 0.051 billion yuan from Yuanxin Satellite, accounting for 48% of current revenue, and accounts receivable with Gakishin Satellite were 0.049 billion yuan. Looking ahead to 25-26, the company's revenue is expected to grow rapidly as the company's main business recovers and mass production of satellite payloads and terrestrial terminal products.

1H gross margin increased 18.78 pct year on year, and the cost ratio is expected to dilute 24H1's gross margin by 68.33%, up 18.78 pct year on year; of these, 2Q gross profit margin was 74.09%, +38.33pct year on year; we believe that the increase in gross margin was mainly driven by the increase in the share of the satellite sector. The company's 1H24 net interest rate is mainly pressured by: 1) Expense rate increase: 24H1 sales/management/R&D/finance expense ratio year-on-year change +1.93/+10.52/+41.25/ -12.32pct. Among them, the year-on-year increase in management expenses was mainly due to a year-on-year increase in housing depreciation expenses, 1H24 R&D expenses remained stable year-on-year, and the year-on-year increase in R&D expenses was mainly due to an increase in the cost ratio. The decline in the financial expense ratio was due to a year-on-year increase in interest income. 2) Asset impairment losses and credit impairment losses compared to the same ratio; 2) Asset impairment losses and credit impairment losses compared to the same period There has been an increase.

Maintain a “buy” rating

Although the company's short-term demand fluctuates, benefiting from information technology construction and satellite internet development, the company's performance is expected to enter a new stage in 25. We expect net profit to be -0.068/0.272/0.365 billion yuan in 24-26. Considering the company's core position in G60 Starlink and the leading broadband position in the military region, we gave the company a 25-year PE46x (comparable company average value 42x), target price 19.96 yuan/share, maintaining a “buy” rating.

Risk warning: The installation of new equipment falls short of expectations; the development of defense informatization falls short of expectations.